Homework Help Essay on the Housing Bubble

In the US the housing industry peaked in 2006 but again declined very fast in 2006 and 2007 in what was later referred to as the US housing bubble. This lead to a crisis for home owners by the yea

Prior to the housing bubble, it was easy to get loans for buying homes and one of the most preferred leans by the way referred to as the adjustable rate mortgage or the ARM. Under this loan one’s payment could increase based on their economic index and as a result many people lost their homes due to their loan payment increment under the concept of adjustable rate mortgage.  For example in January 2006, a study by the federal government showed that many people with the ARMs did not know how or when their rates would be reset or even the minimum they could pay on these loans. In addition, many people believed that the federal governments’ too tax monetary policy was responsible for this housing bubble though other thought the problem lay elsewhere.

The scope of real estate bubbles, Are housing bubbles contagious?

     Probably it was possible for the housing bubble to occur without the banking crisis that rocked the country during the great recession period. However, just the same way that banking crisis can occur without a real estate bubble or crisis, the crisis within the banking sector at the time of the housing bubble provided an important link to the occurrence of the housing bubble. For example, the real estate sector not only amplified the housing bubble but also occasioned a major implication for the stability of the overall economy in the entire country.

     However, in the real sense, the housing bubble resulted from pervasive incentives caused by a combination of a systematic information as well as high leverage that led to a higher risk for real estate projects unlike the case could have been if such projects were financed through equity claims.

        Through the examination of the last hoisting bubble, it emerges that, the boom crest fell in the middle of the last lase decade and this led to a tumble that caused many home owners to owe more over their mortgages  that their homes are worth. This forms that foundation the idea that the housing bubble is contagious in scope. In essence those means or indicates that the housing bubble spreads or has the potential to spread form one area to a neighbouring area. As a result is could be proper to say that housing bubbles are contagious in scope. For example housing bubbles are known to spread from year after year or from region to region. For example it began in California in 1997, then the area between New York and Boston and eventually spread slowly along either coast in to Arizona, Nevada and eventually Florida. This makes housing bubbles contagious in scope.  

The real estate bubble issue and ethical considerations

         In the face of the housing bubble crisis, a new has emerged over what or how far the federal government can go in saving the people from bankruptcy. This is particularly important in the face of the reality that the US company law does not acknowledge that authorities inclination to rescue giant corporations for the consequences of insolvency leads to taxpayers being coerced to bear such burdens as well as badly structured equity stake in institutions that are otherwise too big to fail.

How the real estate industry, Home Buyers, and other stakeholders can help in avoiding real estate bubbles

      One of the surest ways of bringing the housing bubble in to an end is through institution policies that can help in increasing employment as a means of ensuring that more people have the purchasing power to service their mortgage loans. In addition, there is need for the governments to increase or expand the different forms of social safety nets for their citizens in addition to helping in the generation of mores jobs even under the pressure to institutes cut backs on spending. Additionally, the government needs to invest more in skills training as well as over sustainable long term economic recovery through job creation.

     On the other hand, there is a great need for the government to evaluate and reassess the real estate principles in order to make it the basic guideline for all real estate matters. For instance, there is need for a better or clear definition of the legal and the economic aspects of real estates. For example how ownership, transfer or real property as well as other matter revolving around real estate markets, titles deeds, taxation, property management, liens and mortgages. 

Author's Note

The article was published on/in/at the Homework Prospect