The Housing Market and Strength of the Economy Essay

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A New House Economy

A New House Economy
The strength of the economy is one of the factors that affect a person’s decision to purchase a home. When the economy is not doing well, people have to consider the security of their job and household income. It has to be considered if the marginal benefit of purchasing the home is worth taking the chance that you might default if you become unemployed. One might be less likely to make a large investment like a home when the stability of their job is in question. They might consider staying in their current situation, rather than moving, to save money in the event of a job loss. On the other hand, there are benefits to purchasing a home in a down economy. For those who are lucky enough to be in a secure job or own a business that happens to be thriving in a bad economy (because it sells or produces a substitute item that is in higher demand in a down economy), purchasing a home in this environment is advantageous. Home prices will be considerably lower (buyers-market) allowing you to purchase more home for your money. Also in a down economy, interest rates are much lower than in a healthy economy as the government tries to encourage lending and borrowing. As a result, the money you borrow is done so less expensively.
When the economy is doing well, people enjoy more job security and have higher incomes; this optimism makes people more willing to make big purchases like a home. During periods of economic growth, there are many more buyers in the market and house prices will be higher than in a down economy. This means that people will get less home for their money which means less disposable income for other

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