...Introduction The real estate market, like other markets, is subject to the pressure of supply and demand. When speculation runs wild, prices can inflate rapidly. This is a "housing bubble." The danger in this situation is that the market will not be capable of sustaining the inflated prices, so the value of properties begins to come down, sometimes rapidly. Definition of a Housing Bubble * A "housing bubble" is a cyclical economic event where high trade volumes inflate prices, which ultimately become unsustainable, causing a lowering, or "crash" in values. Economic bubbles may be called by a variety of terms, including a speculative bubble, a market bubble or a balloon. Economic cycles of this nature are not exclusive to real estate. They have occurred throughout history in a variety of markets, including stocks, tulips and pottery. Contributing Factors to Unstable Housing Conditions * It could be argued that a housing bubble is really an example of a credit bubble. Although real estate is the underlying commodity, most house buyers use credit -- in the form of a mortgage -- to secure the property. Lax lending guidelines, rapidly inflating values, speculative buyers and the use of adjustable rate mortgages (ARMs), which can adjust to higher rates, are all factors in accelerating the likelihood of borrowers defaulting on their loans. The Effect a Housing Bubble Has on Local Markets * Tighter credit is likely to result after a housing bubble bursts; and although...
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...Housing market in New Orleans after hurricane Katrina Table of contents 1. Introduction………………………………………………………………………3 2. Pre-Katrina situation ………………………..…………………………………..4 3. After-Katrina situation…………………………………………………………..6 4. Current situation New Orleans….………………………………………………8 5. Conclusion……………………………………………………………………...…9 6. References…………………………………………………………………….….10 Introduction It is August 29th of 2005 when the United States of America is badly affected by one of history’s most catastrophic nature disasters. Hurricane Katrina hits the south of New Orleans and causes severe damage to this city. This second biggest hurricane in the entire history of America left 80 percent of New Orleans flooded, approximately 80 billion dollars of damage and more than 1800 killed civilians. Due to this disaster, New Orleans was almost completely destroyed including the residences of thousands of families. Not only were there economic enormous problems but also political questions rose by that time. The president by then, president Bush, came in discredit because of cutting in the federal funding which was protecting New Orleans. Since then a lot of things have actually changed but unfortunately, too late. Complete neighborhoods were removed from the map, people became homeless and moved to different places. The effects on the housing market in New Orleans were immense. Because of the effect hurricane Katrina had on the housing market in New Orleans...
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...Table of Contents Introduction 2 Changes in the market 3 Economical 5 Political-legal 7 Regulatory pressure 8 Conclusion 8 References 11 Introduction The UK property market has experienced remarkable development in the last 50 years; with a notable shift in the trends investors tend to use, (Halifax, 2010). The housing market in the UK has seen great change when comparing the figures over the last 15 years. According to Beckett (2014), the rise of housing prices have led to the creation of a good investing opportunity both in the residential and in the commercial property market. The housing boom has been in chaos since the market crashed in the 2007, but as many industries continue to struggle, the UK housing industry is to experience a recovery, many experts speculate. This is due to the increase in the need for housing due to the increase in demand of properties, both for commercial and residential use; and the decrease in supply. Even with most individuals in the UK still struggling to recover from the 2007 market crash, market watchers estimate that the base line is bound to increase and revive the industry. The property industry though has been experiencing a constant boom through the years. A survey by De Montfort University in 2005 showed that the development finance was at £23 billion; this was up from £9 billion, 6 years earlier, (Gibertson, 2006). The trend has been in constant growth despite a few setbacks due to the strain in the economic pressures...
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...Final Project: A New House – Decision XECO 212 Week 9 7/21/11 Seffan Bune Home ownership is considered by many as the pinnacle of the American dream, a two car garage, white picket fence, and nice backyard for those projects that are somehow always nearly completed. This is what we have been told is the major leap into adulthood and makes you one of the high caliber Americans who can claim that their home is their castle, but is this still true in this country? With the financial downturn and the home foreclosures at a all time high, nearly every block I see has a home for sale at reduced price so how does this milestone still hold up to scrutiny and how can this generation still reach for that goalpost of what is considered the standard of the happy nuclear family? The decision to purchase a home is the major point in an American life and it is a decision that should not be taken lightly because if not done correctly and with a plan on how to sustain the purchase that is not solid the consequences could be dire. After taking this course I have found out that there are methods and concepts that if implemented correctly the idea of owning a home is still within grasp of many of us but there are many things that need to be weighed before pulling the trigger on such a large and momentous decision. First are the ten principles of economics which I will go into more detail later on that are crucial to making a large purchase be it a home, car, or any other large ticket item...
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...Section I The Market at the Bottom of the Pyramid CEMEX: Innovation in Housing for the Poor CEMEX is a multinational cement manufacturing company operating out of Mexico. It is the largest cement manufacturer in Mexico, the second largest in the United States, and the third largest in the world. The company has operations on four continents and recorded global revenues of $6.54 billion in 2002 with a gross margin of 44.1 percent. THE INNOVATION. . . CEMEX leads the paradigm shift of companies profitably providing housing for the poor, the Tier 4 population, instead of governments or not-for-profit organizations. CEMEX manufactures and sells raw cement, ready-mix concrete, aggregates, and clinker (used to make cement) under different brand names. As the largest cement company in Mexico, CEMEX operated in a highly protected legal environment with little competition until the 1990s. It competed mainly on price and controlled 65 percent of the market share in Mexico. However, during the 1990s, the legal barriers in Mexico broke down, paving the way for international competition. CEMEX found itself operating in a highly competitive open environment. Starting in 1987, under the leadership of Mr. Lorenzo Zambrano, CEMEX experienced explosive growth, mainly through acquisitions and global expansion. Today, the company has 235 cement and ready-mix plants in Mexico, 60 in the United States, 85 in Spain, 45 in Venezuela, 4 in Indonesia, and 4 in Egypt. In the new competitive arena...
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...think otherwise. The rich continue to get richer and the poor get poorer while the government makes it even harder for the middle and lower class to stay out of poverty. Lack of affordable public housing and also lack of middle income housing are a few of the problems. The Gap in the wealth divide along with these two problems makes life very difficult for middle class and lower class to survive during these hard economic times. “Affordable housing is a term used to describe dwelling units whose total housing costs are deemed "affordable" to those that have a median income. Although the term is often applied to rental housing that is within the financial means of those in the lower income ranges of a geographical area, the concept is applicable to both renters and purchasers in all income ranges.” (Wikipedia) In The United States and Canada the accepted guideline for being able to afford a house is a cost that does not go over 30% of a household’s gross income. The costs include taxes, insurance and utility costs. When the costs go over the 30% to 35% mark then the payments are then considered unaffordable for that household. Government policies that increase building costs and or restrict the supply of housing are one of the most primary reasons for the lack of affordable housing. As this pictures shows median Home values continue to increase. Not to mention the economy is at a bad place right now...
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...are number of factors that lie behind these crises in both housing and credit markets. These factors emerged over a number of years. Causes proposed include the inability of homeowners to make their mortgage payments, overbuilding during the boom period, risky mortgage products, increased power of mortgage originators, high levels of debts, bad monetary and housing policies, international trade imbalances, and inappropriate government regulations. In January 2011 The U.S Financial Crises Inquiry Commission reported its findings. It concluded that "the crisis was avoidable and was caused by: Widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages; Dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk; An explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis; Key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw; and systemic breaches in accountability and ethics at all levels.“ This crisis is not merely seen as the result of the U.S. housing bubble's bursting or the collapse of the United States' subprime mortgage sector. The credit excesses that created this disaster were global. There were many bubbles, and they extended beyond housing in many countries to...
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...motivates every individual to competitively strive for personal success and prosperity. Competition drives every aspect of business and fuels financial markets to remain strong and healthy, as long as confidence remains strong across all financial sectors. A well functioning market economy is contingent upon the trust of all players in the field to act ethically and responsibly. The current crisis our economy faced and the numerous fraudulent financial scandals have resulted from failures in corporate responsibility and ethical behavior, not failure from the market itself or competition. This failure of corporate responsibility has led to a loss in investor confidence, resulting in the sluggish rebound of our economy from the rocky bottoms of 2008. Competition encourages efficient and innovative financial services, while the stability of every financial sector depends on the trust of every financial institution to adhere to their corporate responsibilities to act ethically and in the best interest of their shareholders. The global recession of 2008 and the collapse of Wall Street is the most indicative example of the how misrepresentative portrayal of financial investments can only deliver exponentially large returns for so long. The perfect storm of factors struck the heart of our economy all at once- the collapse of the housing market coupled with overextension of subprime mortgage loans. While the going was good, the power of greed showed its true colors. Many loan originators...
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...HBR.ORG Profits at the Bottom of the Pyramid A tool for assessing your opportunities by Erik Simanis and Duncan Duke OCTOBER 2014 REPRINT R1410G Erik Simanis is a senior extension associate at Cornell University’s Johnson School of Management. Duncan Duke is an assistant professor of management at Ithaca College’s School of Business. 2 Harvard Business Review October 2014 This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886. FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG PROFITS AT THE BOTTOM OF THE PYRAMID A TOOL FOR ASSESSING YOUR OPPORTUNITIES BY ERIK SIMANIS AND DUNCAN DUKE During the past decade, many multinationals have come up short trying to make a profit by solving the pressing needs of low-income communities. Preoccupied with their social missions, companies have optimistically taken on challenging projects, only to be surprised when weak consumer demand and obstacles such as bad roads October 2014 Harvard Business Review 3 This article is made available to you with compliments of FM Global Insurance. Further posting, copying, or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886. PROFITS AT THE BOTTOM OF THE PYRAMID keep revenues low and costs high. Over tretched s and disillusioned...
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...Why is Housing Hurting? By: Andres Salazar November 26, 2011 Instructor: Ana Gonzalez Course: Microeconomics For the first time in nearly three years, repeat buyers and investors have overtaken first-time buyers as sales leaders once again in the nation's housing market. The sellers' markets, home sells quickly and sellers have a lot of pricing power. As a result, prices rise more rapidly than at other times. During buyers' markets, homes may sit on the market for a while before selling, so sellers become more flexible and may even drop their prices. The market is determined by supply and demand. Some buyers and sellers hope to time their purchase to take advantage of market cycles. If buyers aren’t qualified, supply won’t be met and demand will be weaker. Without buyers supply means very little. Demand is a strong determinant of real estate pricing as well, and changes just as supply does. However, the market is not experiencing the traditional trade-up cycle because first time buyers are being sucked out of the bottom of the market by cheap vacant bank foreclosures. Every time a first time buyer buys a vacant home from a bank, three homeowners remain sitting on the market without a buyer. As the inventory piles up, prices come down. As prices come down, foreclosures rise. As foreclosure rise, first time buyers buy from banks. Somebody needs to focus on this dynamic soon, it’s been six...
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...for the purpose of freeing up the entire square footage of the room to use as one so desires. The product and company has little direct completion, the benefits are immeasurable and the growth potential for the company is enormous. The product leverages cost savings when it comes to customers needing more space, and conversational topics for those who have no space or financial restrictions, but are looking for that next leading-edge product. This marketing plan will discuss in more depth the products and services associated with Suspesion Beds which includes a detailed target market, competition and substitutes, pricing, channels of distribution, promotional strategies and a promotional budget followed by a wrap-up. ------------------------------------------------- Products & Services Suspension beds, just as the name implies, is a unique and revolutionary idea in the home furnishing market that maximizes space without the costs associated to adding a complete room. And, it has the distinction of giving kids something very different to the common everyday household. The gained space can easily be visualized by thinking of the space in a room simply by thinking of the room with the bed removed. The beds are currently all custom made-to-order and come in any shape you desire, meaning height, thickness round corners, octagon, etc. while adhering to standard bed sizes for the sleeping area. These beds utilize the unused, overhead space just below the ceiling in any...
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... Aim 3 Limitation 3 UK Housing Market 3 Review of UK housing market 3-6 Factors effect in UK housing market price 7-14 a) Demand 7-11 b) Supply 12-14 Present situation/scenario 15 Government innovation 19-21 Conclusion 22 References 23-24 INTRODUCTION The UK housing market has experienced a varied rate of ups and downs in house prices for past few decades. During the past 30-year period, the nominal and real average annual price in UK has undergone volatile changes. There were three boom periods: 1980s, late 1990s and early 2000 and a bust in early 1990s (Sloman, John2006). These rise and falls in house prices had been primarily caused by the changes in demand for housing. Being a big open economy, UK is not really affected by external shocks caused by changes in international prices and currencies but by various internal and associated factors. Money supply and government policies are believed to be important factors behind the booms. The primary reason behind the increase of money supply was continuing high economic growth during the concerned period. From examination of historical development of the UK housing market, it can be argued that house prices fundamentally come under pressure from many aspects: demographic pressure, increasing income, accumulated wealth and so on. However, present trend of the housing market has not given birth to any alien determinant that is causing the market to behave abnormally. This paper attempts...
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... Table of Contents 1. Part 1: Minimum Wage law in Hong Kong 2 2. Introduction 2 3. Minimum Wage – Economic Theory 2 4. Introduction in Hong Kong – May 2010 3 5. Impacts – 15 months later 5 5.1. Employment 5 5.2. Firms profitability 6 5.3. Inflation 7 6. Economic cycle considerations 9 7. Part 2: Housing issues in Hong Kong 9 8. Introduction 9 9. Housing situation in Hong Kong 9 10. Housing Demand in Hong Kong 11 11. Housing supply in Hong Kong 14 12. The Current Government Policies 15 12.1. Policy 1: 15 12.2. Policy 2 16 12.3. Policy 3 16 13. Conclusion 17 14. Bibliography 18 Part 1: Minimum Wage law in Hong Kong Introduction The Hong Kong Government introduced of a Minimum Wage in Hong Kong in May 2011, in response to increased incomes disparity in the territory. It uses economic theory to predict certain impacts such as level of employment, profits of firms, inflation effect and potential positive effects on the economy in general. Minimum Wage – Economic Theory Economic theory tells us that when artificial price floors are introduced in the market, they force prices to remain above the level that balances supply and demand. The same is true with minimum wage; it raises the quantity of labor supplied and reduces the quantity of labor demanded, it creates a surplus of labor that translates into unemployment (see figure 1). [pic] Figure 1: Price floor created by minimum wage ...
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...recession will be weakness in the housing market. The housing market had been the primary fuel for the recovery until th e last year, as there was an unprecedented run-up in house prices since 1997. With prices now he aded downward, construction and home sales have dropped off by almost 20 percent against year ago levels. Even more importantly, borrowing against home equity, which had been the main factor fue ling consumption growth, will plummet as many homeowners lack any further equity to borrow against. The result will be a downturn in consumption spending, which together with plun ging housing investment, will likely push the economy into recession. The economy will see a subst antial net loss of jobs, with nominal wage growth slowing as the labor market weakens over the course of the year. Overview This recovery has been fueled to a very large exten t by a housing bubble, just as the second half of the nineties cycle was fueled by a stock bubble. Sin ce 1997, average house prices have risen by more than 50 percent, after adjusting for inflation. Hist orically, house prices have moved at approximately the same pace as the overall rate of inflation. 1 This unprecedented run-up has not been associated with extraordinary population or income growth, bot h of which have been below their average pace for the post-war years since 2000. It is also not a ssociated with any new restrictions on supply, as housing construction was at near record...
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...http://www.mtgprofessor.com/a%20-%20purchasing%20a%20house/manufactured_housing_the_bad_news.htm "I am purchasing a top-of-the-line manufactured house, but I am being offered bottom-of-the-line financing, even though my credit is pretty good. They want 8-9% when other mortgages are going for 5-6%. How come?" Most purchasers of manufactured housing, including you, are shut out of the mainstream mortgage market. They must find loans in a parallel market, which is much like the unsecured personal loan market. Lenders in this parallel market assume that loss rates on manufactured house loans will be high, as they are on personal loans, and they price them accordingly. They view manufactured houses as poor collateral that provides them with little protection. One reason for this view is that manufactured houses can be moved. Before the HUD building code went into effect in 1976, manufactured houses were called "mobile homes", and this term is still widely used. Even though few ever leave their first site, they remain tarnished by the image of mobility. Lender concern that the collateral can disappear is well grounded when the house sits on rented land, which is the case for about half of all manufactured houses. Most leases are short, and if the landowner decides that it is more profitable to use the land in some other way, the manufactured house owner must move it or leave it. Since the cost of moving is very high, and in many cases the property is worth little more than...
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