essay must have a cover page and must be 5 pages including the cover page (The U.S.Housing)

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Economics

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. In order to receive maximum points for the essay, it must contain a summary of the lecture that was attended, additional information not presented by the lecturer, and opinions on the information and subject that was presented. Keep in mind my policy of plagiarism (that don't copy others student's work). All essays will be submitted via CANVAS. (essay must have a cover page and must be 5 pages including the cover page) The subject is:

The U.S. Housing Bubble and Great Recession

Paper Format:

  1. The paper must be typed, 12 fonts, and double spaced, with cover sheet (No cover 5 points off).
  2. Use headings within the report when appropriate.
  3. The paper should be between 4-5 pages in length.
  4. Please cite your sources using MLA or APA Format – (the Writing Center can offer assistance if you do not know how to do this). Some other helpful sites include - http://owl.english.purdue.edu/owl/resource/560/01/, http://owl.english.purdue.edu/owl/resource/557/01/, http://www.cuyamaca.edu/tpagaard/EnglDept/Resources.htm (Links to an external site.)Links to an external site.
  5. Points will be based on content and compliance with stated format requirements.

Unformatted Attachment Preview

. Financial Markets Securitization Converting home mortgages into securities that are more easily bought and sold in a secondary market. Lowers risk through diversification Creates a stock market for real estate. Dramatically increased funds flowing into mortgage markets. Financial Derivatives Financial contract whose value is derived from another financial instrument. Credit Default Swaps • Insurance contract that pays an investor if there is a default on a financial instrument. that specialize in maximizing Hedge Funds Pite, unregulated investr short-term specula miny sho and a down- 2011 m 2010 Dec change SD County 359.930 375,790 382.226 349,597 495,497 585,974 The Contraction Period 14.21 (1.7) (9.3) (29.4) ) (15.4) Rogal (2.9) 805.000 568,000 530,000 2012 494.500 478,630 411,250 Financial Markets: Fundamental Investors: Purchasing real estate for end-use or rental income. Value based on rental markets. Appreciation occurs from secular forces such as income growth, population growth, and inflation. Determines mean price trend line that long-run values tend to gravitate toward. In normal times represents 80% of buyers. Basically we're in uncharted territory. It seems we have Speculative Investors: developed a speculative culture about housing that never - Purchasing real estate to "flip" at a profit. existed on a national basis Value based on expected appreciation. Subject to irrational behaviors such as herding, self-fulfilling prophecy, and the greater fool syndrome. In normal times ants 20% of buy 20-2014 i 35% and 25 before. Robert Schiller Sub-Prime Mortgage Lending Typical Prime Borrower Down payment - 2 20% down Debt-to-income ratio - 531% Credit score 262000 Typical Sub-Prime Borrower Down payment - 31% Credit score - < 620 May have: History of late payments Judgment, foredosure, repossession, or non-payment of a loan in the past. Bankruptcy in the last 7 years 370
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Explanation & Answer

Attached.

OUTLINE

1. INTRODUCTION
2. BODY
3. CONCLUSION
4. REFERENCE


Running Head: ECONOMICS

Economics
Name
Instructor
Course Title
Date

ECONOMICS

2

HOW UNITED STATES HOUSE BUBBLE CAUSED GREAT RECESSION
A recession is a decline in the economy; it is accompanied by the decrease in the GDP,
trade and employment opportunities. The Great Depression was observed in the United States of
America in the year 2007 which indeed sunk the economy of the Nation. In the present day when
you ask any America about the great depression, they will start by mentioning Submarine
Mortgages, Lehman brothers, and Wall Street greed. However, other factors led to the Great
Recession which many Americans never noticed like; financial market practices, structural
problems and collapse in house consumption which also lead to the decline in demand for new
housing construction (Schwartz, 2014).
From the year 2006 when the Great Recession started occurring, land prices steadily
began increasing across the Nation, and the value of the real property rises too until
unsustainable levels are reached to relative to income. The increase in land prices leads to
decrease in home prices hence making many owners find themselves in contrary equity. This
creates a mortgage debt to be higher than the value of the property. The complex house bubbling
factors include; tax policy, historical low-interest rates, tax lending standards and failure of
regulation to intervene the housing bubble.
Most borrowings took place in the consumer age period which was a mortgage debt.
With the speculation that home prices were to co...


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This is great! Exactly what I wanted.

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