The Housing Policy in the United States

0 Comment

Demand for housing has gone down in the United States in 2008 and 2009, as a result of the economic crisis. In a recent article, the demand was reported to decline during the period from January to September this year from 18 to 19 percent. (Malgate, 2009) This is an indication of slowed construction activities. The NAHB, in this report, declared that construction of new houses was flat in September, and doubts the sustainability of the US housing recovery. A report stated that the number of building permits fell by 1.2% in September. It is considered to be the biggest decline in building permits during the year. and a disappointing indication for the housing industry. In economics, demand is a function of price. Demand goes up or goes down with price movement. Demand has increased as a result of the Tax Credit policy. The Tax Credit policy of the government to new home buyers has flagged down the cost of housing in the U.S. Its effect, as reported by Margate, has raised the number of new home buyers in 2009 by 31% mostly coming from distressed home sales. The rise in July sales, in the National Association of Realtors report, said that it was due to the impact of the tax credit. The tax credit is due to expire on November this year, and the realty business is worried about its effect on the housing industry (Margate) The multiplier effect on macroeconomic growth, on job creation and on the State budget, The current financial crisis in the United States had a multiplier effect on macroeconomic growth, on job creation and on the State budget. It has also produced an adverse effect on people as well as in many developing countries. The slow economic growth in the US has reduced demand for other countries’ exports, lowered remittances, tightening of the credit markets that even led to a stop in external financing.The deep financial crisis in the US prompted the government to adopt fiscal policies to stop the further decline of the economic growth.