When Benjamin fills out an appraisal for a lender, he has to note if there is a fracked well or an impoundment lake on or near the property. Real estate experts say another problematic trend is that many homeowners insurance policies do not cover residential properties with a gas lease or gas well, yet all mortgage companies require homeowners insurance from their borrowers.
Why do we have a boom and bust cycle instead of a long, steady economic growth period? The answer can be found in the way central banks handle the money supply. Individuals and businesses can then borrow money easily and cheaply and invest it in, say, technology stocks or houses.
Many people earn high returns on their investments, and the economy grows. The problem is that when credit is too easy to obtain and interest rates are too low, people will overinvest.
Things that have been overinvested in will decline in value. Investors lose money, consumers cut spending and companies cut jobs. Credit becomes more difficult to obtain as boom-time borrowers become unable to make their loan payments.
The bust periods are referred to as recessions; if the recession is particularly severe, it is called a depression. Investors and consumers get nervous when the stock market corrects or even a crashes. As companies lay off workers, consumers lose their jobs and stop buying anything but necessities.
The bust cycle eventually stops on its own. That happens when prices are so low that those investors that still have cash start buying again. This can take a long time, and even lead to a depression.
Government subsidies that make it less expensive to invest also contribute to the boom-bust cycle by encouraging companies and individuals to overinvest in the subsidized item.
For example, the mortgage interest tax deduction subsidizes a home purchase by making the mortgage interest less expensive.
The subsidy encourages more people to buy homes.Overview. Congress created the Federal Reserve System in to tame the business cycle once and for all. Optimists believed central banking would moderate booms, soften busts, and place the economy on a steady trajectory of economic growth.
As the NFL draft creeps closer, front offices and coaches are busy weighing the risks and rewards of every prospect. The business cycle, also known as the economic cycle or trade cycle, is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend.
The length of a business cycle is the period of time containing a single boom and contraction in sequence. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions.
The Housing Boom and Bust [Thomas Sowell] on ardatayazilim.com *FREE* shipping on qualifying offers. This is a plain-English explanation of how we got into the current economic disaster that developed out of the economics and politics of the housing boom and bust.
The “creative” financing of home mortgages and the even more “creative” marketing of financial securities based on American. From commodities to real estate, markets, the economy, interest rates, entitlements and everything else, now you too can harness the power of demographics to stay ahead of the curve and survive and prosper through any booms and busts ahead.
While the media and enviros have focused on shale drilling’s potential to poison the water and air, they've overlooked its potential to poison the real estate market.