...London Abstract A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the present discounted value of their planned future consumption of housing services) to those short housing. In a closed economy representative agent model (the special case when the birth rate is zero, of the Yaari-Blanchard OLG model used in the paper), there is no pure wealth effect on consumption from a change in house prices if this represents a change in their fundamental value. When the birth rate is positive, higher fundamental house prices driven by the housing demand of future generations will boost current consumption. There is a pure wealth effect on consumption from a change in house prices even in the representative agent model, if this reflects a change in the speculative bubble component of house prices. Two other channels through which a fall in house prices can affect aggregate consumption are (1) redistribution effects if the marginal propensity to spend out of wealth differs between those long housing (the old, say) and those short housing (the young, say) and (2) collateral or credit effects due to the collateralisability of housing wealth and the non-collateralisability of human wealth. A decline in house prices reduces the scope for mortgage equity withdrawal. For given sequences of future after-tax labour income and interest rates, a fall in house prices will then depress consumption...
Words: 9686 - Pages: 39
...consumer purchases fall, increase in unemployment and decline in house price . In the United Kingdom, housing prices also dropped, but during August the average cost for a home rose by 1.6%. This is, according to the article, mainly because of low interest rates and shortage of supply. Low interest rate, the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors), would create a outward shift in demand, which means the willingness and ability of buying commodity goods would increase. This happens is because low interest rate encourage buyer(consumer) to borrow more, which lead to an increase of spending, therefore this makes the equilibrium moved to a new position, resulting in a increase in price. According the article, the problem of house price is also cased by the mortgage repayments. Low interest rates would lead to lower mortgage repayments, this means that homeowners, usually predicted to sell their homes during a recession, to refrain from doing so. This again create a inward shift in supply of home, the willingness and ability of providing a commodity decreases, as less owners decided to sell their house, which in result the position of the equilibrium would change and lead to a increase in price about 1.6%. As mentioned in the article, someone predicted that when there is a rise in interest rates in the future, the housing market may experience some falls in average price...
Words: 789 - Pages: 4
...villa and it took more than 24 hours to dry it. Now here is a surprising fact – Winsun previously printed 10 houses in a day. The cost of each house was reported to be $ 5000. Same number of houses, if built the traditional way, would need no 3 months and definitely a huge manpower. Winsun, Dutch Studio and Softkill Design are a few major companies that have been working for couple years on printing 3d houses. Now that Winsun has unleashed the very first 3d printed villa, it seems that it is pretty much possible to print not only just houses but entire cities. Winsun now joined hands with an American financial company and they aim to establish 3d printer plants in 20 countries. In China, Winsun aims to create 100 such plants. Egyptian government has already signed a contract with Winsun for printing 20,000 houses for use in desert. The idea is pretty much clear – we are moving towards 3d printed houses, cities and villages. On the other side of the picture, Behrokh Khoshnevis, a pioneer of 3d printing is already working with Nasa on printing lunar structures. According to the Behrokh, we will see majority of the cities and houses being 3d printed in near future (approx. 5 years from now). This will eventually lead to printing of houses for low-income families at a massive scale and at government-level. The future seems pretty obvious – we will be living in 3d printed houses and cities after a few decades. Why do we have to spend a few good months on construction...
Words: 723 - Pages: 3
...date in the future. Derivatives are used to control risk. They can be used to reduce risk (known as hedging), or to increase risk (known as speculation) in order to enhance returns. 1 Futures Introduction A futures contract is a standardised, legally binding, marketable agreement to trade a specified asset on a specified date in the future at a specified price. The futures contract will specify the details of the transaction, with particular regard to: • Price • delivery date • type of asset to be delivered • quantity of asset to be delivered • minimum quality of asset to be delivered o this factor is important for commodity futures Note that, the ‘price’ of the future is the specified amount that is paid by the buyer to the seller on the delivery date. No money passes from the buyer to the seller at outset. Types of futures contracts Futures contracts were originally based on commodities (e.g. sugar, wheat, gold), and have been traded since the 18th Century. However, financial futures have been traded on the Chicago Board of Trade (CBOT) since 1972 and London International Financial Futures and Options Exchange (LIFFE) since 1982. In practice, futures contracts are settled ‘for cash’, rather than by the delivery of the underlying asset. The cash settlement is the difference between the price of the underlying asset at the delivery date and the price agreed at the outset of the contract. The seller of a futures contract is...
Words: 3406 - Pages: 14
...If the common phrase of being at ones home is home sweet home, would it be apartment sweet apartment? Owning a house or renting an apartment is significant to many individuals who like the concept of coming to their living quarters and knowing this is theirs. There are many advantages and disadvantages to owning either a house or renting an apartment, but where they live relies on the personal needs. There is much to consider between the two because the area that one wishes to live depends on how flexible their life styles are. The main decision is left to you and the main idea is what is the best choice for you. Preferably I believe in the concept of owning ones house rather than renting from someone else because the property is mine and owning a home adds more stability in my life. Both the house and apartment are stable living quarters, but its how concrete one wants to stay with their property which lies the question. When owning one's house, he or she is in full control of the home and does not have to worry about anymore payments to the house. That stability allows he or she to control the inputs on what to put into the house but its all an option; a way of controlling all factors of ones house. "As a home owner, you have complete control over when you move versus moving when you may not want to, You will always have peace of mind living in your own home" (Should I…, 2007). Basically controlling all perspectives that an owner could have...
Words: 949 - Pages: 4
...Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase a new house. First...
Words: 1804 - Pages: 8
...Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase a new house. First...
Words: 1806 - Pages: 8
...similarities yet many differences as well. Assertiveness Sweden scored 3.38 and ranked 61st globally. This demonstrates Swedish society does not emphasize on rewarding performances. Compared to Finland, they scored 3.81 and ranked 47th globally. This demonstrates the Finnish are neither dominant nor aggressive in their social relationships. Many countries characterized Finland as a “cultural lone wolf” (Chhokar, J., Brodbeck, F., House, R., 2007) Future Orientation Sweden scored 4.39 and ranked 9th globally. Sweden’s society encourages and rewards future-oriented behaviors. For instance, Sweden prefers its society to plan and invest in the future, and delay gratification. They are more concern with long-term rather than short-term goals. On the other hand, Finland scored 4.24 and ranked 51st globally. The Finnish supports the opinion of moving forward in the future together. Although Finland’s ranking dropped from 14th to 51st, they still believed that more emphasis on future orientation is necessary to improve Finland (Chhokar, J., Brodbeck, F., House, R., 2007). Gender...
Words: 1057 - Pages: 5
...involving your second house in Rancho Cucamonga, CA would affect your personal income tax for the 2013 tax year. We would like to inform you that the transaction would qualify for a charitable deduction that may reduce your taxable income. In reaching this conclusion, we consulted the United States Internal Revenue Code (IRC); Internal Revenue Service (IRS) Publication 526, Charitable Contributions; and IRS Publication 950, Introduction to Estate and Gift Taxes. Facts The facts as we understand them are as follows: You would like to transfer to a charitable remainder trust (CRT) the title to your second house, allowing you to accomplish two objectives. First, your sister would be allowed to live in the house during her lifetime. The current market rent rate in Rancho Cucamonga is $1,081 per month, or $12,972 per year, but she would not be charged rent. Second, the title would pass to California State University, Fullerton (CSUF) as a charitable contribution upon her death. The current value of the house is $235,145. Applicable Laws A donor may be subject to the gift tax when giving a gift. The IRS defines a gift as money or property, or the use of either, that is given without receiving something of equal value in return. A donor is, however, allowed to give each donee up to $13,000 per year in gift value without having to pay the gift tax. In the year when property is transferred to a CRT, the taxpayer can usually claim a deduction for the future value of that property...
Words: 685 - Pages: 3
...Management: Case Study Abstract Jane is looking for possible investment ideas in order to obtain her future house down payment. She does not want to spend much time in managing her investments and has a medium-low risk level. Her goal on investment is seeking for growth for down payments on a house if she decides to pay 25 percent down payment. However, if she decides to pay less than 25 percent down payment, her investment goal is seeking for income. Different investment goal differentiates investment choices. The purpose of this case study is to recommend possible investment choices for Jane and the criteria used to evaluate those investment choices. Introduction Jane has inherited $30,000 from her grandmother and plans to invest this money for a future down payment on a house. Her plan is to buy a house outside of Toronto area in the next three to four years. She has a lost risk level of four out of ten as she does not want to lose the money she got from her grandmother. Moreover, she would like to obtain tax relief on her investment. At the same time, she only wants to spend about one hour per month in managing her investment. She has an adequate emergency fund on hand; therefore, she does not need to access these funds. Her travel expenses will be paid by her income. Investment Goals The primary investment goal is to obtain a future down payment on a house outside of Toronto in the next three to four years. She has a medium-low risk level of four out of ten...
Words: 1836 - Pages: 8
...What if everything you lived for and loved all burned to the ground? How would you react and what would you do? In chapter eight of To Kill a Mockingbird, by Harper Lee, Miss Maudie, who is a family friend of the Finches, was found staring at her charred azaleas the same morning her house and garden burned down. In this passage, Lee uses the literary elements of conflict, tone, and foreshadowing to develop the theme that you have to keep your head up and continue looking ahead even during the hard times. Miss Maudie really loved her azaleas and took great care of them. The conflict with the fire shows how unexpected things can happen, but it is up to the person as to what they will do next. “At the front door, we saw fire spewing from Miss...
Words: 914 - Pages: 4
...learned and future implications essay on the Financial Crisis by Andrew Winkler The current crisis is catalyzing an array of responses, including searching for causes, reworking regulations, scapederstanding of the cause, the remedies may do more harm goating and a massive capital injection. Without a clear unthan good, innocents may be scapegoated, and valuable progress in financial tools may be lost. Worse, it will happen again. From a simple mathematical model of the underlying make housing prices inversely proportional to the interest rate. If interest rates are cut in half, house prices double. When those rates double, house prices are slashed in half. When interest rates are large, they are not likely to double or halve, but when interest rates are small, a small adjustment can be a big percentage change, and the danger of big swings in housing prices is appreciable, even inevitable. With no down payment, no amortization and closing economics, I first predicted this crisis in July of 2004. An economic dynamic relating very low interest rates to the this outcome foreseeable, indeed inevitable. The current full explanations; see mattersofinterestmatters.blogspot.com. costs folded into the loan, the only issue in affording a structure of the demand curve in the housing market made crisis had a mathematical cause. There isn’t space here for This much is clear to everyone—the crisis results from house is the monthly payment, which is the house price half...
Words: 1616 - Pages: 7
...R i s k M a n a g e m e n t: The Current Financial Crisis, Lessons Learned and Future Implications Essay on the Financial Crisis by Andrew Winkler The current crisis is catalyzing an array of responses, in- make housing prices inversely proportional to the interest goating and a massive capital injection. Without a clear un- When those rates double, house prices are slashed in half. cluding searching for causes, reworking regulations, scapederstanding of the cause, the remedies may do more harm than good, innocents may be scapegoated, and valuable progress in financial tools may be lost. Worse, it will happen again. From a simple mathematical model of the underlying rate. If interest rates are cut in half, house prices double. When interest rates are large, they are not likely to double or halve, but when interest rates are small, a small adjustment can be a big percentage change, and the danger of big swings in housing prices is appreciable, even inevitable. With no down payment, no amortization and closing economics, I first predicted this crisis in July of 2004. An costs folded into the loan, the only issue in affording a structure of the demand curve in the housing market made multiplied by the interest rate. If interest rates are cut in economic dynamic relating very low interest rates to the this outcome foreseeable, indeed inevitable. The current crisis had a mathematical cause. There isn’t space here for full explanations; see mattersofinterestmatters...
Words: 1623 - Pages: 7
...Grammar of the English Language (London: Longman, 1985). 2 PARTS OF A WORD A word can be divided into its STEM (the basic part of the word containing its meaning) and its INFLECTIONS (the endings added to indicate such things as that a noun is PLURAL or a verb is in the past tense). Examples: Stem: Inflections: PARTS OF A SENTENCE SUBJECT The subject is the person, thing or topic which the sentence deals with. To discover the subject, ask who or what before the verb, e.g. in the sentence The house stands on the hill, what stands on the hill? Answer: the house. Examples: The house stands on the hill. It overlooks the plain. PREDICATE The predicate is all of the sentence except the subject. Examples: The house stands on the hill. It overlooks the plain. OBJECT The object is the person, thing or topic upon which the subject carries out the action of the verb. To discover the object, ask who or what after the verb, e.g. the house overlooks what? Answer: the plain. Examples: The house overlooks the plain. I see him clearly. He watches himself carefully. dog walk s in dogs ed in walked In some cases a whole clause...
Words: 2134 - Pages: 9
...of the people of London during bombings. This idea is also heavily focused on and shown through a short story written by Graham Greene. The obliteration of Old Misery’s house in this short story titled,“The Destructors” demonstrates that destruction is a form of creation. Old Misery’s house is the epitome of the past. The staircase as well as the paneling in the house are 200 years old. The house was built by a famous architect. In the time that the story takes place, architects are too becoming a thing of the past, as people don't care about the quality or appearance of the buildings that are created. Most of all, the house is the one of few to have survived the first blitz, a series of bombings in London. It is all that is left of the past, and it keeps Old Misery just there. He...
Words: 696 - Pages: 3
