...Countrywide's logic in thinking that originating loans for people with poor credit ratings would result in positive outcomes was that Countrywide thought that with continuing growth in the economy, the incomes of the borrowers will increase in the later years and they would be able to repay higher installments. Their logic was that homeowners would be able to get higher incomes from their properties as the property prices were increasing. Further, if any homeowner was not able to repay, he could resell the house at least 50% profit. With a growing economy and increasing economic growth Countrywide felt that there would be positive incomes. A great deal of criticism regarding this issue, as indicated in the case study as well as from...
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...Susilawati Fernando Baptista Anunu Petra Christian University Surabaya, Indonesia Key words: low cost housing, buying behaviour, consumer behaviour, motivation, East Timor Demand of low cost housing increased from 1995 to 1997 which is shown by the number of housing loan approval. In order to develop the most suitable marketing plan, developer needs to know some factors which influenced to the decision making process of buying house. This research used a residential development in PT Delta Comoro Permai, Dilly as a case study. A survey to homeowners has been done to evaluate the motivation and perception factors in buying home behaviour. The survey has been done on the 3rd August to 29th August 1998. In this study, four main components have been examined. Physical and linkage are not as important as environment and utilities for the homebuyer. Moreover, the result is consistent with developer’s motto ‘clean, secure, aesthetic, healthy and prosperity’. This study provides further recommendation in the environment and utilities components for the new development in the future. Introduction In 1998, East Timor has 14,874 square meters land area which occupied by 747,527 residents. The population growth rate was 3,02% (Anunu, 1999: 1). The above conditions created demand on proper housing with affordable cost. Demand of low cost housing increase from 1995 to 1997 which is shown by the number of housing loan approval. Minister of Home Affairs, Minister of Public Works and Minister...
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...Case Study: Tapping the Ethnic Housing Market MKT 87505 – Consumer Behavior Theory & Analysis California Southern University Case Study: Tapping the Ethnic Housing Market “A subculture is a segment of a larger culture whose members share distinguishing values and patterns of behavior,” (Hawkins & Mothersbaugh, 2010, page 156). Subcultures are frequently encountered in America due to the ‘melting pot’ nature, continual immigration into the United States, and various religious and ethnic viewpoints experienced in modern day society. A collision of all these subcultures in America has led to difficult marketing approaches to address both the core values and norms of the American culture and unique market behaviors, values, and norms that may be specific to other subcultures. In the case study, “Tapping the Ethnic Housing Market,” Fannie Mae evaluated ethnic groups to determine the different perceptions associated with the home-buying process (e.g. reason to purchase a home, knowledge about the overall purchasing process, and confidence in the process). The case study will discuss the opportunities and challenges facing housing lenders and real estate agents today based in the perceptions of each ethnic group. Analysis “Ethnic subcultures are those whose members’ unique shared behaviors are based on a common racial, language, or national background,” (Hawkins & Mothersbaugh, 2010, page 158). The Fannie Mae case study analyzes the different perceptions of the home-buying...
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...majority of college students accrue large amounts of debt by the time they graduate; the power of the Pell Grant is not what it used to be. “Federal need-base grant aid provides low-income students with access to a higher education. Without this aid, many low-income students take on unmanageable levels of debt burden or forgo a college education altogether (King, 161).” The problem of escalating consumer debt is exacerbated by enticing offers, ease of obtaining credit, retroactive rate increases by credit issuers, and the deceit tactics coupled with rampant consumerism and lack of attention by borrows. Creditor’s see the vulnerability in college students, especially. "I think they try to take advantage of students because they know that they’re kind of scrounging for money," said Benjamin Stewart, a senior political science major. "You have books, you have tuition and parking is outrageously expensive, so it’s easy just to swipe a credit card and put it on there, kind of like magic. But you end up (hurting) yourself in the long run (Students, 1).” Arizona State University campus in Tempe students are constantly pestered with offers to sign up for credit cards. I too, have been enticed by offers of free items just to fill out the application, such as umbrellas, candy and baked goods on several occasions, while walking through Wal Mart. Other offers include things like an extra 10 to 15 percent off of your first purchase, consumers may buy that extra “want” because they think...
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...Journal of Urban Economics 65 (2009) 74–90 Contents lists available at ScienceDirect Journal of Urban Economics www.elsevier.com/locate/jue Why do households without children support local public schools? Linking house price capitalization to school spending ✩ Christian A.L. Hilber a,b,∗ , Christopher Mayer c,d a London School of Economics, Department of Geography and Environment, Houghton Street, London WC2A 2AE, UK Spatial Economics Research Centre (SERC), UK Columbia Business School, Uris Hall #808, 3022 Broadway, New York, NY 10027, USA d NBER, USA b c a r t i c l e i n f o a b s t r a c t Article history: Received 19 October 2007 Revised 19 September 2008 Available online 27 September 2008 JEL classification: H4 H7 I2 R31 Keywords: Capitalization Elderly Land supply School spending While residents receive similar benefits from many local government programs, only about one-third of all households have children in public schools. We argue that capitalization of school spending into house prices can encourage even childless residents to support spending on schools. We identify a proxy for the extent of capitalization—the supply of land available for new development—and show that towns in Massachusetts with little undeveloped land have larger changes in house prices in response to a plausibly exogenous spending shock. Towns with little available land also spend more on schools. We extend these results using data from school...
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...Research Plan I. Title: Research plan to an area in UK which has potential to become gentrified. II. Investigators Kaie-Liis Asu III. Introduction and goal of the Project This research will be concentrating on using gentrification indicators as a framework to examine and analyse changes to predict the gentrification within community neighbourhoods, to find a solution for an investment company to find an area, which has a potential to become gentrified. The objectives of this programme is to establish and point out the factors influencing gentrification within any town in the world, in this case in United Kingdom, that may be going through gentrification process – changes that result when wealthier people acquire or rent property in low income and working class communities (Grant, 2003). The research needs to be carried out to establish what factors cause gentrification, to examine demographic shifts, how to control gentrification etc...There are two wider areas with main issues that we need to be concentrating, when researching gentrification: Production-supply of 'gentrifiable' property; the workings of housing and land markets; spatial flows of capital and the 'rent-gap'; role of public and private finance; 'uneven development' (Slater, 2000). Consumption- The characteristics of the 'pool of gentrifiers'; 'new middle-class' ideology; consumer demand and consumption practices; (counter) cultural politics; the roles of race, gender and sexuality; education, occupational...
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...product lines, it includes single-family and multi-family housing, both attached and unattached, on an individual basis and as part of planned developments or communities. In terms of sectors served, these products and services are provided for individuals and communities in the residential, commercial, industrial, hospitality, and leisure/resort sectors. These homes are made to appeal to homebuyers at various price points, degrees of urbanization and ruralization, demographic segments and stages of life. Competitive products are differentiated based on factors such as location, reputation, quality, features, design and price. Competition in the home building industry comes from a number of sources. First, the industry itself is widely fragmented, in terms of the number of players. At the peak of the industry’s prosperity, at the height of the recent housing bubble, the top ten players in the industry accounted for only 35% of its sales in dollars. The actual number of players considered legitimately “in the game” at a nationally-visible level numbers between 1,500 and 3,000 at any given time, depending on the industry’s prosperity level. This is a very large number for any one industry to have at this level. There are also innumerable very small local players. But, competition for the new single-family home building industry does not only come from within. Such competition also comes from the re-sale of existing single-family homes, new and existing condominiums, rental...
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...have to take out loans in order to cover the cost of attending. However, the rising rate of student loan defaults has recently become a serious issue that needs to be addressed. Economists agree that the rising amount of student loan default can prove to be a good indicator when seeking to predict future payments on student loans (Ismail, Serguieva, & Singh, 2011). Recent studies have shown that the growing rate of student loan default on higher education loans could cause another financial crisis in the United States because the loans are government backed, the cost of higher education is on the rise, and unemployment rates are on the rise preventing repayment. Taking on student loans can feel like and endless cycle of entrapment to the borrowers and they are often left with the belief that they have no other choice than to default on their loans. It is impossible to say with 100% certainty where the culpability lies for this unfolding crisis. One point of view is that the students may be at fault for not fully understanding the magnitude of the debt they are taking on by applying for these loans in the first place. Another point of view is that possibly the schools may be at fault for not offering more instruction to the borrowers about the loans and charging higher prices for tuition. Perhaps the fault is with the loan issuers for allowing the students to take on these loans even though there is no real surety that they will be paid off. Regardless of the...
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...important than in days gone by. The season is ripe for home purchasing with property values as favorable as they are and interest rates at record lows, yet softening in the real estate market comes at a price and with similar softening in income coupled with uncertainty in job stability, now is arguably a better time to lease for many. The pressure to jump on the opportunity to own at a low price is real but, with careful consideration one may discern as I have that my harvest will come later in the season. I like most Americans expect to find that purchasing a home will come with responsibility and financial burden that is a great deal different than the burden of simply leasing a property for my family to call home. There are pros, cons, and trade-offs worthy of consideration in making the decision to purchase or wait. Sacrifice will need to be maid and I must decide whether the gravity of the sacrifice is acceptable or more than I am willing to shoulder. A careful review of what I am willing to give up and the cost in doing so to achieve my desired gains are the first principles of economics to occupy space in my mind. I feel fortunate that I don’t have to study and make such important decision on my own, fortunate that I have knowledgeable...
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...First Time Home Owners Tax Credit Laura R. Kohler National American University Everyone dreams of owning their own home at some point in their life. This idea is set into our heads as children. We grow up, get a job, get married, buy a house and start a family. It’s the American dream. What if there was more incentive to buying your first house? Good news, there is. The first time home owners’ tax credit was designed especially for you. That is if you so happened to purchase your home between April 2008 and April 2010. In 2000, the United States economy began to fall. With this fall came the housing market crash. Some say that the housing market has yet to recover. It’s made a big step though. With the big fall in the housing market, Washington got worried and decided to step in to help. In December of 2009 mortgage rates were at a historical low. There were ideas of making a tax credit that would be 10% of the purchase price to help lower mortgage rates for anyone who bought a home. They thought that this would make people jump at the opportunity and finally make that first purchase. Another idea was to help struggling owners lower their mortgage and refinance. The problem with this was finding out who should really be saved. Purchasing is an amazing first step. It’s a great way to start securing a financial future for you and or your spouse and family. The big question is, are you ready? One of the first things that you will need to figure out...
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...THE JOURNAL OF BEHAVIORAL FINANCE, 11: 82–91, 2010 Copyright C The Institute of Behavioral Finance ISSN: 1542-7560 print / 1542-7579 online DOI: 10.1080/15427560.2010.481981 Psychological and Cultural Factors in the Choice of Mortgage Products: A Behavioral Investigation Masaki Mori International University of Japan Julian Diaz III and Alan J. Ziobrowski Georgia State University Nico B. Rottke European Business School Using data from three countries that differ economically, culturally, and geographically, this study examines the role of Prospect Theory’s reflection effect, a psychological factor, in combination with Uncertainty Avoidance (UA), a cultural factor, on the choice of mortgage products. Experiments were conducted using business professionals in the United States, Germany, and Japan. The results suggest that risk-averse people tend to become more risk seeking, leaning more toward adjustable-rate mortgages (ARMs) when choosing a mortgage type, and that this psychological effect may underlie the mortgage choices of people who tend to choose ARMs, even across countries with different cultures. Keywords: Adjustable-rate mortgage, Fixed-rate mortgage, Prospect theory, Uncertainty avoidance, Experiment INTRODUCTION In terms of household risk management, the choice of a residential mortgage is one of the most significant decisions to make. At the end of second-quarter 2005, the value of outstanding U.S. residential mortgages was $8 trillion, 65% of the...
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...The current issue and full text archive of this journal is available at www.emeraldinsight.com/1742-2043.htm CPOIB 5,1/2 Wrong assumptions in the financial crisis Manuel B. Aalbers Amsterdam Institute for Metropolitan and International Development Studies, University of Amsterdam, Amsterdam, The Netherlands Abstract Purpose – The purpose of this paper is to show how some of the assumptions about the current financial crisis are wrong because they misunderstand what takes place in the mortgage market. Design/methodology/approach – The paper discusses four wrong assumptions: one related to regulation, one to leveraging, one to subprime lending and one to predatory lending. It briefly discusses some policy implications. Findings – The role of the state in the mortgage market is more complex than suggested by those who blame the state for not doing anything. The concept of leveraging can explain, at least in part, why the losses in financial markets are bigger than the losses in the housing market. Many subprime loans were sold to prime borrowers. Subprime lending was not designed to increase homeownership rates, but to fuel profits by exploiting vulnerable borrowers. Practical implications – It is too easy to argue that everyone made mistakes; most borrowers cannot be blamed for being sold risky, overpriced loans. A rescue plan is needed for defaulting borrowers and those already in foreclosure. Originality/value – The paper does not present new research, but brings together...
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...Construction Industry: A Pakistan Perspective ABSTRACT Purpose - The primary objective of this study is to evaluate the issue of suitability, acceptability and degree of implementation of Quality Management (QM) practices in the construction industry of Pakistan. Currently the status of adoption of QM principles particularly in this industry and more specifically in the prevailing culture and context of Pakistani environment is overwhelmingly poor which led the researcher to go for this study. Methodology/sampling - The study entails questionnaire development and the analysis of its responses from seventeen leading construction organizations operating in Pakistan during year 2012. The study also incorporates data from various secondary sources. The analysis was carried out using basic statistical tools such as mean, median and standard deviation and bar chart was employed to represent the data. Findings - The findings revealed that the concept and meaning of quality is not understood and interpreted in its true sense. The conformance to standard specifications (SOPs) is considered to be equivalent to implementation of Quality Management which is far from truth. It was also determined that general lack of awareness and untrained employees that are mostly uneducated labor is one of the major causes towards this dismal. Practical Implications - It is hoped that the outcomes of this study may provide a guideline to the owners of the construction industry and help them understand the...
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...Media Ventures 15.376 Real Estate & Recruitment – A strategic Analysis Introduction: During this semester our team examined two key issues that have a significant impact on the lives of many working professionals: real estate and recruitment. Though these two issues appear to be disjointed, they have a similarly significant financial impact of the quality of life of most individuals in the world. Real Estate: I. Background: The real estate industry is in a unique state of flux brought on by the proliferation of the sharing economy. The advent of AirBnB, UBER, Lyft, Zip CAR have effectively demonstrated that communal ownership of an asset is often much more efficient than singular ownership, provided an efficient channel for distribution and use of the asset exists. Though AirBnB has made great strides towards bringing home ownership into the fold of the sharing economy, an analysis of the notion and future of home ownership indicate that substantial room for innovation exists in addressing the pain points associated with the use of property. II. Pain Points: Despite the innovation of recent years, homeowners continue to be plagued by several persistent pain points related to liquidity, taxation, equity and maintenance of property. Liquidity: Real estate still remains largely an illiquid asset due to the high costs associated with the sale of property. No reliable peer-to-peer network exists for the sale of property, thereby leaving homeowners...
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...NACA QUALIFICATION CRITERIA The NACA Mortgage is our answer to the huge sub-prime and predatory lending industry. NACA has conclusively shown that when working people get the benefit of a prime rate loan, they can resolve their financial problems, make their mortgage payments and become prime borrowers. NACA’s track-record of helping homebuyers with credit problems become homeowners debunks the myth that high rates and fees are necessary to compensate for their “credit risk.” NACA’s mission is to make homeownership available on the best terms for Members who would otherwise be prevented from obtaining an affordable mortgage. NACA is open to everyone regardless of their income or where they want to live as long as they adhere to our eligibility requirements, policies, and procedures. The real estate and mortgage industries are filled with bad actors who contribute to the destabilization of our communities and the exploitation of working people. As an alternative to these predatory practices, we will work with you for as long as it takes to purchase a home, and we will support you for as long as you have your NACA Mortgage. The NACA Qualification, which is required for a NACA Mortgage, is an extensive analysis of your finances to determine whether you are ready for homeownership and what monthly mortgage payment you can comfortably afford. Depending on your situation, this process can take one session, several months, or longer. NACA will work with you for as long as it takes to...
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