Impact of Housing Market Crash
“The Impact of housing Market Crash on Global Economy”
The housing market in the United States became a nightmare for many people who had taken out loans found and they were not able to pay their mortgage repayments. When the value of homes decreased, the borrowers realized themselves with negative capital. The negative movement of housing sector did effect the United States economy. Individual house owners and investors could not react to the situation and their properties lost value. Rates of mortgages increased extremely high that’s why mortgages no longer became affordable for many people, and thousands of mortgages defaulted. Many ...view middle of the document...
There many sectors influenced by housing market crash, I will discuss 3 fields, global real estate, automotive industry and world tourism.
The graph which is below shows the US foreign trade in goods and services for 2008 and 2009.
According to U.S Census Bureau foreign trade, United States exported goods and services for 1,842,682 million dollars in 2008. On the other hand this amount decreased to 1,575,037 million dollars in 2009. We see the same fall in import volume too. In 2008 US imported goods and services for 2, 541,020 million dollars. But the next year which is in 2009 the import volume of the country went to down to 1,956,310 million dollars. This statistics show that the US economy had difficulties after the recession and the impact of the crisis covered whole world. Because the numbers are of the import and export decreased (from 2008 to 2009). Especially there is a big fall in import volume.
Impact on global real estate
The housing market crash in the United States has changed into a global phenomenon, with real estate prices down in many countries like Irish countryside, Spanish coast, Baltic seaports and even in parts of northern India. Experts said that some countries, such as Ireland, will have hard time more than the United States, with the possibility that the downturn could turn into wholesale collapse. Not just Ireland, the crisis spread into to Eastern Europe too. West Europeans stopped buying investment properties in Warsaw, Estonia, and other former real estate Klondike’s. Further east, in India and southern China, the prices stopped increasing. Especially after stock market went to down very sharply which caused by housing market crash, people had no cash to invest into property. Also sales of apartments slowed down which was very active in Hong Kong. The prices of houses and apartments started to drop in this city. In New Delhi and other parts of northern India, prices fell down 20 percent to compare over the past years. Ireland and Spain were trembling, while growth in India that year is expected to slow only a percentage point or so, from its recent pace of 9 percent.
Think about United Kingdom which had one of the most power European housing markets, with less of an oversupply than Ireland or Spain. Then previous summer came the subprime crisis across the Atlantic. By end of the summer, there was a run on a British lender, Northern Rock. A month later, mortgage approvals dropped 31 percent, compared with the number in the previous year, and by November, real estate brokers began reporting the first declines in housing prices. In March, average prices fell 2.5 percent, the largest monthly decline since 1992, according to HBOS, a mortgage lender. (Mark Landler, 2008)
“In 2009 the total value of construction in Ukraine fell 48.2%, to 4.78 billion US dollar, after a 16% fall in 2008, according to the State Statistics Committee. In Chernovtsy, the centre of Western Ukraine, popularly known as Little...