...Running Head: A NEW HOUSE-ECONOMY A New House – Economy Axia College of University of Phoenix Principals of Economics October 23, 2010 When purchasing a home it is very important to take note of the economy at that time. At times the economy favors buyers and other times it favors sellers. To ensure that you purchase your home that the right time in the market, you must make sure you consider the marginal benefits and the marginal costs associated with purchasing a new home. Marginal benefits refer to the change in benefits over the change in quantity and marginal costs are the change in cost over the change in quantity. For example, during a recession it would not seem as though purchasing a home would be a good idea because the marginal costs would outweigh the benefits. During recessions the majority of consumers are spending less and trying to save as much as possible and therefore will not want to take out a mortgage on a home. The removal of the tax deduction on mortgage interest will negatively affect the housing market because it will take away one of the benefits to owning a home. This will make less people want to buy new homes. Having the mortgage interest deducted on your taxes each year gives an extra boost in the homeowner’s refund that could be used for home improvements or other expensive purchases. When I bought my home one of the incentives I was excited to take advantage of was the tax credit that was given for first time home buyers...
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...A New House Economy The strength of the economy is one of the factors that affect a person’s decision to purchase a home. When the economy is not doing well, people have to consider the security of their job and household income. It has to be considered if the marginal benefit of purchasing the home is worth taking the chance that you might default if you become unemployed. One might be less likely to make a large investment like a home when the stability of their job is in question. They might consider staying in their current situation, rather than moving, to save money in the event of a job loss. On the other hand, there are benefits to purchasing a home in a down economy. For those who are lucky enough to be in a secure job or own a business that happens to be thriving in a bad economy (because it sells or produces a substitute item that is in higher demand in a down economy), purchasing a home in this environment is advantageous. Home prices will be considerably lower (buyers-market) allowing you to purchase more home for your money. Also in a down economy, interest rates are much lower than in a healthy economy as the government tries to encourage lending and borrowing. As a result, the money you borrow is done so less expensively. When the economy is doing well, people enjoy more job security and have higher incomes; this optimism makes people more willing to make big purchases like a home. During periods of economic growth, there are many more buyers in the...
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...A New House-Economy Checkpoint Chante Yokley XECO/212 December 11, 2011 John McGee A New House-Economy The FED impacts national fiscal policies through interest rates, which impacts the demand in the housing market (Mankiw, N. G., 2007, p. 657). The Department of Treasury introduced a refinancing program that allows consumers to refinance mortgages to take advantage of lower interest rates. The Fiscal Policy impacts prime lending rates, which are the determining factor in consumer borrowing. The higher lending rates mean a higher price paid for a new home. As rates increase, demand decreases causing a decline in the housing market and an overall lag in the economy. A contractionary fiscal policy would provide a short-term decrease in the money supply but would provide lower inflation in the long-run, reducing lending rates and increasing the aggregate demand in the housing market (Mankiw, N. G., 2007, p. 778, pp. 5). The strength of the economy would create an increase in marginal benefits, exceeding marginal costs by strengthening home owner’s equity. The government offers programs and tax incentives (deductions) that subsidize home ownership, making it affordable to be a homeowner. One in particular is the Mortgage Interest Deduction (MID), a popular tax break for middle to higher class citizens; research shows that the beneficiaries from the MID are in these societal classes (Stansel, Dean & Randazzo, Anthony, 2011, executive summary, p. 6). There...
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...Purchasing a new home is a big decision and should not be entered into lightly and should be given a lot of thought. The marginal benefits and the marginal costs associated with the decision to buy a home can be altered by the state of the economy. Some things can be affected by the actions of the government’s efforts to strengthen economic conditions. An example could be as we talked about in the economic readings; when banks are allowed to lower their reserves, this will make more money available for investment groups as well as potential home buyers who need a loan. This would more than likely result in a decrease in interest rates and strongly encourage borrowers to shop for a loan to buy a new home. If you remove the tax deduction for mortgage interest this can remove one of the strongest incentives some have when purchasing a home. A lot of people will not enter into a long contract that does not provide any sort of tax break? Most adults young and old would find it hard in our current economy to put themselves in a position to have a mortgage they may not be able to pay when there is no tax break. When there are changes in federal income tax rates this factor could also affect my decision. If taxes are high, I have less money earned due to taxes to spend on a mortgage payment. When taxes are low, then I would be more likely to consider making a large monetary commitment such as home...
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...A New House Decision James Wilkerson XECO/212 Prof. Paul March 11, 2012 A New House Decision Buying a house is a decision that can have major consequences for someone if they buy at the wrong time. Purchasing a home is one of the biggest financial decisions that any one person can make. The strength of the economy can give you good information as to when to buy and when not to buy. Timing can be very beneficial for a buyer and understanding how to make the decision when to buy can have long term financial consequences for the buyer. In this case the buyer is me. When making a decision to buy a new house I will look at the principles people face tradeoffs, the price of something is what you give up to get it, rational people think at the margin, and people respond to incentives. While I want to buy a new house there are several different areas that I will look at before making the purchase. How much each home costs plays a role in my decision. It is important for me to live within my means of money so making the right choice will benefit me the most. Looking at new homes there may be two that are different in space, number of bedrooms, and price. I personally am looking for the most amount of space for the price that I can afford. I currently own the house that I have now and in order for me to buy it will have to be beneficial for me to give up what I have at the moment. I face tradeoffs of buying a new house verses...
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...New House Sean Monahan XECO/212 07/31/2011 Phillip Post New House When buying a house I will have to consider many things about the pros and cons of either buying a house or renting a bigger apartment and which would better suit my financial situation at the time. Do I have the saving and financial stability to afford a home right now in today’s market? If I can afford a house what are my limits for payments and the new house price that I can afford? These are few of the questions I needs to think that would suit my situation. I will go over each of these in my paper explaining how to look at each of these things when buying a house. There are few principles that would come into play when thinking about buying a new house such People face tradeoffs. When buying a house I may have to give something’s in order to buy a house that I want. It may have to not go on that family vacation or even not go out every week to a dinner with my wife. I must look at the things that are things that I like or want to do and give them up for things that I need or need to do to get what I want. The second principles ties right into the same things as principle one, the cost of something is what you give up to get it. I need to look at what I am giving up and is it worth what I am going to get in return. In the third and fourth principles bring together another whole aspect of buying house also. Will it be beneficial to my family if I buy a house now or will it be better to wait for...
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...Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase a new house. First...
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...Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase a new house. First...
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...A New House-Decision Coretta Charles Axia College of University of Phoenix July 3 2010 There are many advantages that come with purchasing a home, but before you take that leap there are many economic condition that one must consider before making that financial decision. In this essay we will look at the market structure, marginal benefit, and marginal cost associated with the purchase of a new home. Purchasing a new home can be an exciting experience that comes with great benefits. The thought of owning your own home and not throwing your money away on renting is a thought that brings a smile to my face, a place where my family and I can call home, and a place where my kids can play on their swing in the backyard and have lots of fun. I would like to look for a house that is close to my work place with a good school system and a location that has ample amount of places to shop. But before I start to look at a preferred location for my new house I have to look at my finances. I have to find a house that is affordable for me, one that fits into my budget as well as have all the benefits that I’m looking for. Though deciding to purchase a home is exciting, it is a huge financial decision and looking at my finances there are something’s I will have to give up or cut down on in order to get the size of the house I need for my family, in the principal of economics this is called “Tradeoff” giving up something to obtain something else of a greater value. Sure, if anyone...
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...A New House - Decision XECO/212 May 15, 2011 Don MacLean Axia College of University of Phoenix Much thought should be given and taken into account on whether to purchase a home. The decision to buy a home is a very big and important step that should be entered into very carefully. A new home purchase is one of the most significant decisions people will make in their lifetime. There are many factors that can affect one’s overall decision to buy a home. When people consider making the jump from renting to owning, sometimes they mistakenly consider only the cost of the rent versus the cost of the mortgage payment. Unfortunately, some people make the decision to buy a home without considering these factors. In order to determine how much housing I can afford, I must factor in many things such as location suitable for raising a child, savings, other debts, personal preference, and income. Therefore, I have decided to purchase a home and will apply some of the ten principles of economics to ensure I’m making the right decisions along the way. Utilizing some of the ten principles of economics such as people face trade-offs, the cost of something is what you give up to get it, and people respond to incentives will help shape my decision so the home buying experience can be a thought out process altogether. Other essential factors that must be included are the marginal benefits and marginal costs associated with buying a home. Purchasing...
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...principals that will play a major role in my decision to purchasing a new home. I say “People Face Trade-offs” because in order to buy a house I will have to make sacrifices and give up certain things I like to do so that I can spend that time researching and looking for the perfect home. I chose 2 “The cost of something is what you give up to get it” because not only will I have to sacrifice some of the fun things I like to do but I will have to refrain from spending money on unnecessary things like Starbucks in order to save money. Buying a house is a big step and it will take lots of time and money to close a deal on a house. From researching the right community, home, schools that are close by as well as the miles to and from work. It will take a lot of time. Not only will purchasing a new home take up time but also saving money will be a must. I will have to cut back on certain things and save every bit of cash that I can in order to buy the home that I want. That way when I finally find a house that I like I will have a good amount of money for a down payment. Then I will have to figure out what I will need to sacrifice in order to make the payments. 2. Provide an example for each about decision-making, interaction, and the workings of the economy. * Decision-making is the actions that you decide to do in order to get something done. In the scenario of buying a home, the decision-making would be what house is best to buy, where it is located, and how can I afford it....
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...Product Purchases and the Economy Christian Scheminant ECO/372 May 10, 2016 Mr. Michael Kraynik Product Purchases and the Economy For this paper I’m going to select buying a home as my product of purchase since I’m currently in the market of selling my existing home and purchasing a new home. When considering making large financial purchases in today’s economic world, you have to take into consideration the possible long-term effects on your financial situation, current budget or future outcome. You have to ask yourself if the purchases you want are ideal and are you in a financial position to make such a significantly large purchase. There are so many factors to consider than just personal obligations or wants, but is it economically sound in today’s market as well. In this paper, I will talk about and try to explain some of the economic indicators such as interest rates and inflation rate as well as job market for the area. While considering if any of these indicators impact the supply for what I will demand over a two year period. Also in this paper, I have to answer how I might apply my understanding product, and how I am considering purchasing versus the supply and demand. Also I need to describe the impact on the price of the home and whether making the purchase should or should not occur or possibly be beneficial to me. Lastly, I will see if there are any macroeconomic shifts in supply or demand affecting the price of the Home. Thus, leading to the final...
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...New House Decision Your name Class Date Instructor New House Decision A significant amount of time for consideration and evaluations is a must when making a major purchase such as buying a new home. It is vital to properly review all economic and financial standings regardless of whether they are national or individual when thinking about purchasing a new home. The economy plays a major role in deciding whether or not to purchase a new home. A key role is played by the economy when it comes to purchasing a new home. The key principles of economics prove to be rather helpful to a new home buyer when acknowledging and comprehending the many aspects of the new purchase. Nicolas Gregory Mankiw, a Ukrainian-American macroeconomist who proved to be a rather influential source of American finances, originated the ten principles of economics. His principles are based on decision making as the essence of economy. By following the measure, these principles can increase the profitability while managing individual needs. When making a large financial decision, the basic principles of economics along with my relative needs must closely assess. Comparing marginal costs with marginal benefits while weighing out the disadvantages and advantages of the purchase is included in this process. While the search for a new home continues, a couple of key principles will be used by me when considering my purchase. "Tradeoffs" is the first principle; in economics, a tradeoff means the willingness...
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...Final Project- A New House-Decision Axia College A home purchase is something most people get really excited for, it could be your first time buying a home, perhaps for an investment opportunity, or maybe it’s just the last house you plan to buy for your golden years. For whatever the reason that’s behind your purchase, out there in the land of opportunity, there are economic principles that you should think about during this life changing purchase your about to make. Principles of Economics describe at least 6 principles that can possibly relate to buying a home. This report will be discussing principles of economics that relate to home purchasing, new home purchasing along with its marginal benefits against marginal costs. Also it will show how the economic power itself affects these costs and benefits of buying a home. While we look at the economy power, I will also describe the effect the economy takes through a domestic economy and international trade. A common principle that we normally face is whenever you want something we normally end up giving something away in order to obtain it. Principal one is the chunk of this. These are normal basic decisions that everyone makes daily, the difference is to what significance is the decision. For most consumers a new home purchase is going to be the biggest life decision they perhaps ever make. In the steps of buying a new home a buyer might make the decision to buy a large home, this can create the trade of high payments...
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...A New House - Decision Tonya L. Pugh XECO/212 ECONOMIC THEORY May 6, 2012 Frederick C. Runge, MBA, PMP Growing up all I ever dreamed of was one day to get married to the perfect man, have two perfect little children, and to own my own perfect little house. I did not follow that order when getting these things; however, at thirty six years old I do have it. I am a wife, and no man is perfect I have learned. I am a mother to three beautiful and healthy children, an eighteen year old daughter and twins (girl and boy) who are nine. The house, which is perfect for us in its own right, is coming now, after a lot of hard work and sweat, not to mention a lot of planning and decision making. Locating a house in an area we want to live in is the easiest part of looking for our new home. My husband and I have chosen to stay in the area we are currently living in and renting a home. Everyone here is close and we all look out for one another. My parents are not far, so they can get our children from school and watch them until we get home from work. The local elementary and middle school is within walking distance from the houses we are looking at, as well as the local hospital, fire and police departments, church and local health clinic. Before we move any further in buying our home we need to sit down and make a list of the pros and cons for buying and renting. This is now the biggest decision we are facing in our lives and what we decided will affect us for a long time to come. We need...
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