The Real Estate market greatly affects the entire financial market. Mortgage rates have a big effect on general interest rates. Recently, the Fed declared a plan to buy $40 billion dollars worth of mortgage-backed securities per month, hoping to to lower mortgage rates, thereby increasing activity in the housing market. This act also had a significant effect on the stock market, sending stock prices upward. By lowering mortgage rates, the Fed is hoping to increase available cash for consumers to spend, thereby further stimulating the economy. This can be further explained in the following link:
http://www.sfgate.com/business/bloomberg/article/Stocks-Climb-Treasuries-Retreat-as-Fed-Plans-to-3863273.php
The Real Estate industry also creates numerous jobs and generates high revenues from taxes and property appreciation. The following link shows how Real Estate affects Maryland's economy:
http://www.mdrealtor.org/Portals/0/docs/Communications/Final%20MAR%20Cost%20Study%2008.pdf
In this article, it is revealed that real estate supported approximately 20% of Maryland's jobs, and it was responsible for nearly one quarter of the state's total sales of goods and services while also producing 45% of the total local government revenues through real estate taxes.
"For every five jobs in the real estate industry, the multiplier effect adds another four jobs to Maryland's economy." The Role of Real Estate in Maryland's Economy
These facts help us to understand the significance and importance of real estate in our economy. With these statistic in mind, it's easier to understand how the collapse of the real estate market in late 2008 caused a collapse of the entire economy.
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