Have you ever heard about a housing bubbles? Nowadays, many countries have suffer THE PLANS FOR THE HOUSING BUBBBLE 2 from the expensive house prices, Canada is also not exception. Especially, Toronto which is one of the biggest city in Canada has a big problem due to the housing bubble. An incresing of immigrantes have been moving to Toronto to find a job, demand of house also has been incresing continuously. Compared with demand ,supply is scarce and this situation leads to the housing bubble. There are three solusions, such as giving extra tax to vacant house, rising minimum wage and relaxing rental prices to solve this serious problem. The housing bubble affects people’s lives badly, it can be defined as a phenomenon which house …show more content…
According to Posadzki (2017), there are some main reasons which makes the housing bubble, such as immigration, lack of supply, foreign buyers and speculators. The Statistics Canada says 120,000 people immigrated from outside of Canada into Ontario from July 1, 2015, to June 30, 2016 , thus demend of house is has increased rapidly. Plus, soaring house prices is a result of the lack of developable land comes from the law of goverment to protect greenbelt in Ontario. Also, plenty of foreign buyers are purchasing a house to make a profit, it can be one of the biggest reason of the housing bubble …show more content…
It is fact that buying a house is one of the most important thing in people’s lives, many people wish they could have their own house. However, if house prices is risen continously and if people feel serious burden of having a house, people can feel anxiety. Thus, this case can leads to lower satisfaction of people’s lives.Soaring house prices is not only problem of price, this also affects happiness of life. For those reasons the Goverment of Ontario suppose to guarantee citizen’s economic and psychosocial well-being. Finding a suitble house is difficult like getting stars in the sky because many houses are surrounded by plenty of expensive bubbles. Increased house demand due to the immigrations, houses that are being resold by rich foreign buyers and lack of supply are caused the serious housing bubble problem in Toronto. How can we find solutions to go back to stable
The demonstration in this research is simple and the resources are not rich enough. The query to the relevance between the monetary policy and the house bubble still has not been answered. The level of effect the monetary policy made to the financial crisis is still has not been assessed.
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.
The reality of the worst financial crisis in the last 80 years has led to wide speculation of its causes. While a plethora of theories have been offered, none have been as persistent and as patently false as the assertion that the Community Reinvestment Act of 1977 played a significant role in the housing bubble collapse. Critics of the Community Investment Act (CRA) argue that by pushing banks to meet the credit needs of low-income borrowers, the law forced lending institutions to take on riskier loans that proved to be fiscally irresponsible. The securitization and speculation of these low quality loans led to the housing bubble collapse and the wider financial crisis. This argument is subject to a number of problems, namely: the CRA never mandated lower lending standards, the CRA was enacted over a quarter of a century before the housing crash took place, none of the hundreds of banks that collapsed were subject to CRA legislation, CRA loans had a historically low level of default, and CRA loans comprised an extremely low amount of subprime loans during the relevant period of the crisis. While the CRA may have played some small part in the collapse of the housing bubble and subsequent financial crisis, it is clear that its effect was negligible. There are simply too many mitigating factors that limit the extent to which the CRA could have adversely affected the housing market for the theory to be plausible.
Therefore, a lot of young professionals and working class would move out and live outside the city. Vancouver is well known as the expensive city around the world: "The city has just been ranked the third most unaffordable housing market in the entire world" (Matheson 2016). There are a lot of young professionals
The housing crisis in America is a major problem plaguing the United States' economy. Before a solution is formulated, one must consider the history of the market and the causes of the problem. And after a solution is formulated, one must present an idea for prevention of the problem for the future.
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
“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
The global financial crisis affected the many advance economies, particularly the United States. Unemployment significantly increased, people were evicted from their homes, and the search for employment was a dead end. However, Canada was not affected with the same force as the United States: “Canada’s financial sector was less affected than most advanced economies and it had the highest bank soundness rating in the World Economic Forum surveys from 2007-2008 through 2012-2013.” Despite the relatively stable status of the Canadian economy, Canada was very much involved in the review and improvement of international financial regulations. Canada was in a position to make changes to financial regulations due to their perceived experience in the matter, as Canada escaped the crisis relatively unscathed. Canadian delegates were placed in charge of four core areas in the reformation of financial policy and, “in all these areas, Canada was able to successfully push for reforms that resonated with its experiences and interests in enhanced financial sector regulation and supervision.” This crisis, and the successful reformations that came out of it, further installed Canada as a leader in economics, firmly inaugurating them as the world’s best bankers.
Affordable housing refers to housing units that are affordable by that section of society whose income is or below the median household income. For example, affordable housing should address the housing needs of lower or middle income households. And for sustainable communities, it is one that is economically, environmentally, and socially healthy and resilient.. According to the Western Australia Council of Social Services (WACOSS): "Social sustainability occurs when the formal and informal processes; systems; structures; and relationships actively support the capacity of current and future generations to create healthy and livable communities.” As we can tell, all affordable housing, sustainable community, and social sustainability are
The housing boom created an illusion of ever increasing home equity. It was difficult to walk away from potential homes that seemed good on the surface, but in reality were either money pits or less than desirable. For the uninitiated, making sense out of the chaos when things start to go wrong is an emotional process that lends itself to the gradual disposal of the rose-colored glasses. The upkeep and maintenance that homeownership requires of the inexperienced homeowner, particularly an older home, is comparable to taking on a new entry-level job with diminishing returns. There is a prevailing chaos amid the turmoil of a broken water pipe during a holiday weekend.
Affordable housing in the United States describes sheltering units with well-adjusted housing costs for those living on an average, median income. The phrase usually implies to applied rental or purchaser housing within the financial means of lower-income ranges specific to the demographics of any given area. However, affordable housing does not include those living in social housing owned by government and non-profit organizations. More specifically, the targeted range for housing affordability sets below 30 percent of a household's annual income, including all applicable taxes, utility costs and home owners insurance rates. If the mean income per household breaches the 30 percent mark, then the agreed status becomes labeled as "unaffordable" by most recognizable financial institutions.
When subprime mortgages began to flourish, the term housing bubble came into existence. The term relates to the time in which houses sharply increased in value, and consumers often borrowed at less than the lowest rates. People believed that the price of their homes would rise and they could then refinance for lower payments. The problem with that mentality is many people didn’t just refinance for lower payments, they also refinanced for personal spending. Inflation of home prices meant homeowners suddenly had more equity and were able to spend the money as they chose.
“One out of every two hundred homes will be foreclosed every month, making 205,000 new families enter into foreclosure,” Mortgage Bankers Association. The housing industry in the United States is undergoing an unfortunate crisis. There are way too many homes being foreclosed, which cause a ripple of problems.
Buying and owning your home is part of the American dream. Although the dream itself has since changed, the home still remains the main focal point. Today owning a home doesn’t necessarily mean a house. People now buy duplexes, cooperative apartments, and condominiums. For some families it could take up to a couple of generations before it’s able to have the capabilities of buying a home. To many people it means a certain achievement that only comes after years of hard work. It is a life altering decision and one of the most important someone can make in their lifetime. The reasons behind the actual purchase could vary. Before anything is done, people must understand that it’s an extraneous process and it is a long term project.
Financialization is a complex process that labels global finance as the dominant force that drives all economic and political bearings. In order to understand this concept and the process of how financialization works, this essay will evaluate and assess how the collapse of the housing market led to the fiancial crisis in 2008. According to Economic Geography a contemporary introduction, financialization “is when all sorts of things are transformed into financial instruments for trading among individuals and firms in the international capital markets. Through financialization, fixed properties such as housing are financialized into structured investment vehicles such as mortgages—back securities that can be easily traded among global investors through a variety of financial institutions” (Coe, Kelly, and Yeung, 2013). Trading mortgages, or shares at the global level proved to be a financial disaster for many involved. Ultimately the collateralized debt obligation market collapsed and thus dragged down the entire global financial market.