Welcome to Rye Country Day's Economic Blog. Here you will find perspectives by students taking Economics at Rye Country Day School. It is meant to be a forum where students can openly express their ideas and take positions on relevant economic issues. I urge everyone to participate in presenting their own ideas in an open manner so that we can all learn from each other. Regardless of whether you are currently taking Economics, everyone is invited and encouraged to comment on articles and get involved. Feel free to e-mail me, Alex Osborne at alexander_osborne@rcds.rye.ny.us , with comments or suggestions.

Tuesday, January 9, 2007

Featured Entry - Housing Depreciation in U.S

I would like to discuss the recent depreciation in housing costs in the United States. After the country reached a point where houses were overvalued, the prices have started to drop. The main reason for this price drop is that the demand for new housing is not meeting the enormous supply that has boomed in recent years. The depreciation of housing prices also has its effects among the people of the country and the economy as a whole. Since the values of people’s homes are decreasing, the individual feels less wealthy, and therefore, is less likely to spend money. This causes the economy to recede. In this way, the decrease in housing price lowers the total consumption of the American people.

-Omar Zamir

78 comments:

Matt said...

The prices are falling no doubt. However, I think the real estate market has a lot to do with mortgage rates. When rates are high, people are less inclined to move or re-finance. Whereas, when rates are low, people are more inclined to do both. At the same time, Americans are all about value. If they feel they are executing a proper exchange and receiving full value, they might sell. Of course, often sellers will ask themselves if they can't perhaps squeeze a bit more milk from the tit. If they don't feel they're receiving full value, they refuse to sell at all. We feel very entitled in this country, and that "get more for less" philosophy seems to apply in just about every action we make as individuals.

Josh Anderson said...

I agree with what matt says about the real estate market having a great effect on mortgage rate, but im really suprised to hear that prices are falling because less people are buying. With the population booms that we are experiencing today, logically i assumed the exact opposite. However, further consideration has led me to believe that population increase has alot to do the diminishing number of house buyers because the middle and lower class are growing the most. For many buying a house isn't in their current plans and rising mortgage rates lengthens the process of saving enough money to purchase one's dream home.

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