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The impact of the real estate market on the economy

The impact of the real estate market on the economy
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The real estate industry is having a tremendous impact on the local economy, a comprehensive news report has said. Economies all over the world recently went into a crises, which is not yet fully over, which was attributed to the problems in the real estate industry.

The real estate industry was plagued with unpaid mortgages which caused serious problems for the banks. Interest rates reached their highest heights causing the interest on mortgages to rise. Many people defaulted in payment of their mortgages and this caused a lot of problems in the banks. Some of them have to be bailed out by the government and many others closed down.

This clearly shows that, the real estate industry is an integral part of the economy as anything that happens there is reflected on the economy. People use their homes and real estate properties as collateral for loans and also most of the loans contracted from the banks are for housing purposes. In this vein, the slightest problem in the industry affects the banks.

The report further revealed that, prices of homes reduced to the lowest ever recorded in a long time. The number of houses sold during the economic crises period also reduced to the lowest. Additionally, the number of overdue housing loans also increased, indicating clearly the problems occurring in the market.

Home bought for the period under survey were mostly low cost homes and only few luxurious ones were sold. Experts however say that, this did not affect the profits in any way as the banks have to bear most of the risk by dealing with overdue and unpaid mortgages.

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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