Foreclosure Strategy To solve the foreclosure crisis we must take a multi-pronged approach that tackles the issues making the situation worse and that caused the problems in the first place. Our goal is to do this in an efficient and time conscious manner. Any solution is going to have its positive and negative aspects but we must try to maximize the former and minimize the latter. The biggest problem is that we had and have an overinvestment in real estate that led to an overproduction in housing. In other words we have too much supply. This massive oversupply has led to home prices decreasing. To remedy this we must either increase demand or decrease supply. While I will discuss ideas to achieve both a reduction in supply and an increase in demand, I believe that stimulating the demand side will be more productive. However, if we expand home buyers at the expense of rental owners we will still cause significant damage. Also, keep in mind that the U.S. population is growing at about 1% a year and if left to natural mechanisms will take years to soak up the oversupply. First, let's try to solve the issues that are making the situation worse. We will quickly touch on the oversupply problems and then move onto the demand solutions. One of the reasons for the oversupply of housing is that many individuals that can afford their homes are walking away because of the negative equity in the house. Negative equity in the home means that the mortgage debt remaining is greater than the current price of the home. Statistically, most people who walk away from their mortgage payment have negative equity. They made a financial decision to buy a house at a certain price, but since the current price is lower now they don'... ... middle of paper ... ...ollowing 3 years 20% of your original stock allocation is allowed to be sold, and then in year five 30% can be sold. At any time during this period if it is deemed that the bonus's were misallocated due to poor performance the remainder can be clawed back. This gives an incentive to do what is best in the long run and should eliminate many of the poor short-term decisions. This paper was written to give a general outline of some steps that can be taken to decrease the supply of housing , increase the demand of housing, and fix some of the issues that created the housing bubble. It is not comprehensive as there are more things that can be done, but I have tried to include some of the most relevant. This multi-strategy approach does not only help with the housing crisis, but also is instrumental in economic growth, and providing positive long-term incentives.
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
Employees protested, “that supervisors should have received a reduced bonus because they were not working as hard as they are and the company might be playing with the numbers” (Beer & Collins, 2008 p.6). A beneficial system for the new Scanlon Plan is to rearranged payout count. This will help to regain trust amongst employees and management. Equity Theory stresses integrity to all compensation arrangement and if this is effectively executed, then this will resolve the mistrust issue that employees have with their management team. The rewards should not be paid on a consistent month-to-month basis, instead, on a settled proportion plan, which gives rewards "each nth time the right behavior is demonstrated" (Bauer and Erdogan, 2013, p. 112). Traditionally, this would imply that workers are paid reward each time a specific measure of cash in permitted payroll is met. “The current permitted payroll is at 38% of sales value” (Engstrom, 2008). This requires no change. Instead, when Engstrom comes to a permitted payroll of one million dollars, then 10% of that sum should naturally disbursed to workers as rewards. This tackles numerous past issues with the Scanlon
“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were
employee stock ownership can create a burden of long-term planning for the sustainability and repurchase program; not all employees can be able to purchase stock. According to the case, Atul believes in a total compensation between 0-10 percent based on employee’s salaries could play as a “trade-off” for a “supportive and respective work environment” (Calo et al., n.d.).
This high demand can be due to what many people call “historical low interest rates” as more people are interesting in home ownership especially young people to take advantage of these low rates. A prosperous tech industry in the area that keeps attracting highly skilled workers who earn higher than average incomes increases demand. In her article “Housing affordability crisis drives Bay Area middle-class exodus”, Mary Ann Azevedo explains that the Bay Area created 114,000 new jobs in 2014 and only 8,000 housing units. Azevedo further explains this low inventory, “The City of San Francisco is still producing only 2,000 housing units per year — when it has needed more like 5,000 for the last 20 years and going forward.” These statistics provide a clear picture of the seriousness of the situation and explains one of the major reasons that are driving the prices up with no sight of slowing
They hoped to make the quota because the bonus would make up for the money they lost on these sales.
dropped 10.9% causing the home market to suffer. Individuals who have subprime mortgagees to finance these less expensive homes are often times forced into foreclosure due to substantial rate changes. In affect, the economy faces acontinuing negative cycle of subprime delinquencies that result in tighter credit and lower home prices.17 A worsening of the American housing market will negatively affect the consumers confidence while at the same time worsening the American economy.18
Newham management was replaced due to a bonus structure that would likely increase misstatements. Newham should continue to develop a bonus structure that is not tied to performance.
First off the United States economy, in general, needs to improve. Economy is like a domino effect, and now it is hitting the housing industry. Our unemployment rate is up to about 10%. Banks are not prospering like in the past. Tons of Americans are in debt; by the end of 2008 Americans reached a $972.73 billion debt due to credit cards.
According to the time’s article, “Rising home prices allow lenders to be more generous with home financing, which allows even more prospective home buyers to access the market, further driving up home prices.” This statement seems simple but there is a more going on that might not be so obvious. Using a supply and demand graph, this information is revealed to us. When lenders become more generous with lending it leads to more prospective home buyers being able to purchase a home which results in an increase in demand for housing. The supply, in the short-term, remains unchanged. Over the long-term, rising home prices will eventually lead to more home builders building homes. An increase in demand results in an increase in equilibrium price (home prices increase) and an increase in equilibrium quantity (more homes sold). When demand increases we can measure the changes in consumer and producer surplus. According to gr...
...cially since the beginning of the subprime mortgage crisis that sparked the Great Recession of 2008-2009. The ever-growing unemployment and foreclosure rates will further compound the affordable housing shortages that were already existent. The declining of the middle-class and increasing of the wealth gap continues to raise the question over income inequality and racial disparity. Bright minds have to wonder when the government will step in to curtail the problem currently spiraling out of control.
There is no ageing of stock in the luxury segment as every year there is a price increase of approx. 8% on MRP, which automatically leads to increase in margin. Further, to liquidate such stocks we organize a ‘Friends & Family’ sale every year.
One of the key things for New Zealand’s future is sustainable housing. Sustainable housing insures that people have a roof over their head, and supports not only our NZ families, but also our tourist attraction and peoples appeal to our country. Our current home market system is failing, which means many people are not wanting or simply can’t manage with the way our housing system has basically crashed. The current ‘house crisis’ we are currently dealing with is a prime example of a system that needs a dire upgrade. To ensure that the market stays safe, we first have to make sure we don’t fish it out of the water and then suffocate it once we have it. The housing crisis has simply occurred because of these few reasons:
...getting the stock are extending money but charging a higher percentage. This extra percentage would not be charged if earnings were reinvested which is internal.