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Industry Research: Homebuilding Axia College of University of Phoenix
lawyers. became easy. given tighter credit and lack of demand. Unfortunately. The demand was actually artificial because many of the homes were bought with the intention of them appreciating in value. as they too tried to sell their own developments for profit. causing mass selling of homes. One of the biggest factors for the increased demand was the lax lending by banks when it came to buying the homes and building them. lenders. causing the demand of homebuilding to drop and supply to increase. and other businesses that are related to objects or things bought after a real estate property is purchased. These people . which are in other words. This created speculators in the real estate market. The homebuilding is greatly connected to other businesses. cheap credit. and oversupply. businesses that sell fixtures. which in effects jobs. Homebuilding usually requires many services which can include: contractors. which will affect home sales. There are too many homes in America. businesses that sell furniture. and the only way that can happen is if easy credit was always available. real estate brokers. not to live in but to sell for profit. Businesses are affected by it if the industry is booming or falling. The homebuilding sector can be concluded as elastic in terms of price elasticity. Not everyone can own a home. so others will then rent.Industry Research 2 Homebuilding is an industry that is always cyclical and depends on many factors. it is not the case now so the demand dropped significantly. and homebuilders will be in a losing proposition if they try to build. Homebuilders as well have gone bankrupt for the majority. Banks were lending home builders a lot of money with light restrictions and regulations. and will continue in the indefinite future to lose revenue. Homebuilders became part of the boom. where people bought multiple homes. It becomes a circular feedback loop. Many speculators exited the business and many of whom got foreclosed on.
or in other words less credit. and higher rates. This creates opportunities for others. Investors. appliances. which is giving lots of listings for top brokers. Though they may not be sold right away. This negatively affects businesses who sell these products. Landlords are seeing an increase of renters which is causing an increase of rental prices. are seeing their businesses skyrocket.Since there area less homeowners. who are in businesses of rental properties such as apartments. . so the supply and demand factor is out of balance. or even motels. Real estate brokers will be in less demand as many of them will not make any sales during this time of economic downturn. fixtures. Since many of these foreclosed homes need to be cleaned. Lawyers in the real estate industry will be negatively affected if their business is just focused in that area. Banks are also hiring asset managers to manage many of the properties.Industry Research 3 are heavily impacted because this slow down in the overall real estate market will in effect create less jobs. it would only mean there are less sales for home owner related items such as furniture. which will create the opposite effect of before. Americans cannot afford to buy homes. it is guaranteed income for that broker when it does sell. This is obviously making those who invest for cash flow richer than before. Lenders will be in a worse situation as they have non performing loans on their books. so they are going back to rent. etc. the people who are in this business are seeing a huge increase of business income as the banks are paying them to clean out the debris residing in the homes. mobile homes. Though there are many negative effects of the housing crisis. Contractors will be in less demand as homes are not being renovated and/or built as much. many will benefit. . There weren’t that many apartment buildings built.
thereby purposely making workers compete for jobs. People were finding jobs anywhere they can find. because while some were actually paying the workers market rates for work. The competition of the housing sector became strong. and the homebuilding sector created jobs. The housing sector perpetrated a rebound in the general US economy. Many home builders hired immigrants and paid them low wages. it has created a glut of immigrant workers looking for a job.” which meant they were paid cash. The monetary policies of the Fed and encouragement of the government caused excessive borrowing and in turn fueled the real estate market. which has created an inequality between those who are professionals and the immigrants who needed a job. No money down mortgages and other fancy financial products allowed those to buy homes they can never really afford. Many of the people who bought these homes speculated that they would go up in price. many were not. As people competed for the same jobs. The growth has now declined and the prices of homes are reflecting that. further suppressing the wages. and involved no tax paying. Prices are coming . The housing industry was full of wage inequalities. as the homebuilders wanted more profits. Now that the housing boom as busted. and people were very dependent on it. because US was already in a recession. Builders added more gasoline to this fire by building more homes on top of the oversupply of homes. the wages were decreasing in areas of where there was an oversupply of employment. which created an artificial demand since there was never an intention for people to live in it. one of which was homebuilding. The homebuilders would pay them “under the table.Industry Research 4 There is a wage inequality in the homebuilding sector and is mainly due to immigrants. These policies of easy borrowing only made people take risks.
The economy is related to every business sector especially housing. Homebuilders will suffer as a consequence. The overall general economy will be worse as less money is spent especially big purchases such as homes. . Homes are only priced to the point of what a buyer can afford now. It would not make sense to build homes now since the profit margin would be too low. Sooner or later the homebuilding especially in America will be very slow. it will only create a bigger downturn of the homebuilding sector. given the monetary policies of cheap money. especially to the consumers. Now that the banks are busted. People tend to save more and cautious about big purchases when recession looms. Consumers will not purchase homes as they would rather rent and save their money. it has created inflation in many goods including materials. as it costs less to buy an existing home for sale than to custom build the same one. The US economy is in a recession and given the outlook of jobs.Industry Research 5 down hard and must correct to the point of equilibrium. it will create a ripple effect in all industries. However. The materials to build the homes have increased in dollar amounts and ultimately hurt the bottom lines of home builders. This would only mean that homes they are trying to sell will have to decline in prices to at least to get rid of them and attract bargain hunters. Banks are in control of the overall situation because they were the parties who lent the money to both the consumer and builder.
(2008) Businesses Shed 51. from .com/2006/05/01/news/economy/immigration_economy/index. C.htm Reynolds.d.com/money/economy/2008-08-01-employment-july_N. (2005). (2008) The Evolving Homebuilding Industry & Implications for Consumers. from http://money. Retrieved October 5. W. Home Building’s Direct Impact on the US economy.htm Isidore. Retrieved October 5.) Home and Away.html ________.cnn. (2006.latimes. 2008.com/2008/08/home-building-industry-wageinequality.. 2008. from http://www. (2008).org/generic. M. Retrieved October 5. from http://homeandaway-ubao.jchs. from http://www. P.nahb. Retrieved October 5.000 Jobs. Retrieved October 5. (2005).com/article-2766.safehaven. from http://articles.aspx?genericContentID=44096 Hagenbaugh.com/2008/mar/04/business/fi-econ4 Sanfar. A Slow Down in the Homebuilding Sector. 2008. (2008).blogspot. 2008.usatoday. Retrieved October 5.7%. 2008. C. B. Unemployment rate up to 5.) Illegal Workers: Good For Economy. October 5. from http://www. 2008. (n.html Droke. Retrieved October 5. from http://www.edu/publications/industrystudies/w062_evolving_homebuilding_industry/index. 2008.htm Emrath.Industry Research 6 References _______. Twenty Positives Outcome from This Market. 2008.harvard. Building Sector Roof is Sagging.
htm .com/rtpages/20080507_twentypositive.Industry Research 7 http://realtytimes.