Saturday, November 27, 2010
Median price of a homes sold drop to new lows
Median home prices have fallen to a seven year low. As home purchases slow to levels lowest on the records dating till 1963. Prices continue to fall as supply out weighs demand, there has been some signs of stabilization as home builders have cut back and this can be seen in the 29% drop in housing related GDP. It is clear that the troubled housing market is still have a traumatic effect on the nations economy and will not be section of the economy that will lead growth.
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It is bad news because cutting back in home causes drop in GDP. But in some aspects, it can be seen as good news: because of the decrease in house, the poor can afford a better house. This will increase the total living level. Home builders decision is right, because redundant house will be a waste of labor and capital. It is not efficient to build more than demand.
ReplyDeleteI agree with Yan on the fact that it is not efficient to build more than bemand. However, although the price drop seems more affordable, we should keep in mind that level of income has also dropped over the past few years, which makes it harder to purchase and home.
ReplyDeleteThis article explains how hard the housing market was hit. As Tim stated a 29% decrease in housing related GDP is huge. These means unemployment or figuring out a new job for many people who before made a living building houses or turning around houses they had fixed up for profit.
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