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What r some reasons 4 the decrease in the Real Estate Market, who is affected,how it affects consumer spending
January 9th, 2011 | 
Author: Question by misseve718: What r some reasons 4 the decrease in the Real Estate Market, who is affected,how it affects consumer spending
How does the real estate market affect the economy, who is effected by the decline, how does it effect consumer spending.
Best answer:
Answer by Answergirl
This is definitely another homework question, but one reason the market has gone down (though in reallity it is up, just not as high as in past months) is seasonal. Fall and winter are traditionally buyer seasons.
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this is a loaded question. in fact it is many questions in one. no. 1 – we don’t know if the real estate is on the decline now –October 2006. it could just be temporary called also seasonal or …we have to wait and see. how does this affect consumer spending? does it affect the consumer spending — that is the real question and if yes, what specific areas? will it affect interest rate — mortgage rates specifically? there are a host of industries directly or indirectly connected to the growth of real estate and we just can not “lump them in ” in one shot and make a conclusion one for all. this is part of the answer you are seeking, i hope. the other part — no one knows exactly where the real estate market is really going? within short or long term. I rest my case, so should you.
NO indicator has ever been able to consistently predict RE market behavior. Except Elliot waves of course, but even they are sketchy because the data is somewhat sketchy. RE is accepted as an “illiquid” makret and thus a little harder to track because the data points are fewer and further between.
That said, RE markets just as other markets are moved by herd impulse. The herd has been moving in a certain direction (this case UP), the mania sets in (Aka “the housing bubble”) runs the price way up, near the edge some people start to feel “edgy” then someone or some set of entities starts the other way (in this case, down) and everyone else piles on. In this bubble of all bubbles, it is taking longer to take hold. Notice that we all know that it is a “slowdown”, but few are calling it what I believe it is: the beginbning of a great crash. Look back to a period like 1830-1837. Government made HUGE amounts of money available to the average man to buy land. Eventually the scheme crumbled and property became near worthless. This is just one similar pattern, there are many others. Oh yes, they’ll blame certain things, like “the Fed” (includes too much easy money, interest rates), sleazy realtors talking up the price, “supply and demand”, politicians for restricting building space, etc. but these “reasons” were there all the time in good times and bad and are thus NOT good barometers of why the market goes up and down. The real estate started to slide before interest rates went up, although I agree that it exacerbates the probelem, but the slide had already started before they went up. Should you doubt what I’m saying (and if haven’t seen this type of opinion before , You SHOULD doubt it, but also research it to understand why it’s true). Click on the link to my source. I’ve made this a hobby/passion since the crash in 2000-2003. I’ve read and learned much on the subject. I challenge you to follow this up to attempt to prove it wrong. You’ll find you can’t.