After years of rapid appreciation, house prices barely rose in the
second quarter of 2007, and many analysts expect price declines in
many markets in the near future. There have already been large
drops in house sales and residential investment (house building).
Given the central role that the housing boom has played in the
current economic expansion, many observers fear that a crash in the
housing market will lead to an economy-wide recession. They are
concerned that a fall in house prices could spill over into a
decline in aggregate spending through four channels. First,
builders could respond to lower prices by reducing residential
investment, an important component of gross domestic product (GDP).
Second, since mortgages are backed by the value of the underlying
house, a fall in prices could feed through to financial
instability. Both of these effects have already been felt, with the
rate of residential investment falling by double digits since
mid-2006, and the entire financial sector undergoing a liquidity
crunch triggered by problems with subprime mortgage-backed
securities in August 2007. Third, a fall in housing prices could
lead to a decline in consumer spending through a negative "wealth
effect." Some economists have argued that when house ...
General
Imprint: |
Bibliogov
|
Country of origin: |
United States |
Release date: |
November 2013 |
First published: |
November 2013 |
Authors: |
Marc Labonte
|
Dimensions: |
246 x 189 x 1mm (L x W x T) |
Format: |
Paperback - Trade
|
Pages: |
26 |
ISBN-13: |
978-1-294-24731-9 |
Categories: |
Books >
Social sciences >
Politics & government >
General
|
LSN: |
1-294-24731-X |
Barcode: |
9781294247319 |
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