The Reason Why Housing Prices Are Decreasing
The reason why the housing industry is having problems is very simple!
Many people tend to think that it is only because of the subprime mortgage lending
method that caused the real estate market to crumble. However, that is not the
only reason. As a matter of fact, if it wasn't for this reason, the subprime mortgage
lending method would still have been in full effect. One of the major reason why the
Real Estate Market is in shambles is because of the vast economic improvements in both
China and India. China has more people than any other country in the world and India is
not too far behind. Not too long ago, the main means of transportation for normal working citizens in China was the bicycle. However, as a result of its rapid economic improvement, many people of those same people who used to ride their bicycles to work now drives their cars to work. China's many drivers are now using a lot more gasoline for their cars! This increase in gasoline usage, increases the demand for gasoline. When there is an increase in demand for an item, that item increases in price. In global terms, the world has now increased its demand for gasoline as a result of China's usage, thus increasing the prices at the pump. Now we will relate this increase at the pump to the mortgage crisis.
With the increase in gasoline prices at the pump, it is costing home owners more money to heat their homes, which is cutting into the monthly mortgage payment. If an home owner has to pay $2000, to heat the home as opposed to $700, then it is going to be a little more difficult to pay the mortgage. This make sense, right?
India, on the other hand, has steadily increased its economic strength by providing cheaper labor to American and European companies. Many times a person may think he or she is talking to a credit card bill collector when in fact, that person is talking to someone in India. Many web programmers are working out of India. A person who requests to have a website built doesn't always know or realize that the programmer is from India. It is much cheaper to outsource a web project to an Indian programmer.
Therefore, the subprime mortgage method of lending isn't the only thing that is causing the Real Estate crisis. We can see here that the economic improvement of China and India is causing the Real Estate Crisis in the US, (Glenford Robinson, Mstardom News).
Tags: Subprime Mortgage Loans Lending Housing Crisis China Economy India Asia
