The Economy's Effect on Real Estate

Essay by kthackerCollege, UndergraduateA, June 2009

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Axia College, University of PhoenixThe real estate business can be a very risky and tricky move at times. Even when the economy is at a good point, real estate agents have to work extremely hard to make sales and be the best they can be. When the economy is not at a good point, agents have to work twice as hard. Some of the agents do not make it.

At this time in the United States, the economy is not good. Homeowners are filing bankruptcy, their homes are going into foreclosure and they are losing everything. Not only homeowners, but also businesses all over the country are losing everything they have. The unsold home inventory is at an all time high right now because homes just are not selling. People who do decide to move into a new home would rather buy a cheap house that has had 10 price reductions than to build a brand new house.

Some people who move out of their homes have decided to rent out their old home instead of selling in hopes that the economy gets better. Pre-built manufactured homes are also at an all time low for cancellations. Walsh (2007) stated that in today's time it is hard to buy or build a home. This makes it harder for real estate agents to make money selling homes. When people have to sell their home for less, the agents also make less on it. Real estate agents also do not make money selling homes that are foreclosed on since the bank owns them. Many foreclosed homes go up for auction and are awarded to the highest bidder.

Mortgage rates have a big impact on home building and buying. Statistics state that in October of 2005, individual's mortgage rates hit a two-year high of...