XECO 212 Week 5

CheckPoint: A New House Risks and Benefits

The government and the fiscal policy it implements play a large role in the housing market. In this CheckPoint, you examine how government policy has consequences for you and the decision to buy a house. This helps you consider situations and alternative decisions in your final project.

Assume for this CheckPoint that purchasing a new home is a major decision requiring a substantial financial outlay where the wrong decision has long-term financial consequences.

Evaluate the health of the housing market for the next two years by researching forecasts for mortgage rates, housing starts, and housing prices. The following Web sites provide a starting place for your research:

Mortgage rates: http://www.realtor.org

Housing starts: http://www.nahb.org

Housing prices: http://www.mbaa.org

Submit a 250- to 300-word response addressing the following questions:

Which government bodies influence national fiscal policies that potentially affect the housing market?

What are some national fiscal policies that can affect mortgage rates, housing starts, and housing prices? Be sure to provide specific examples.

What is your recommendation as to the risks and benefits of purchasing a home based on these considerations?

DQs

What is the relationship between GDP and the business cycle? How can you use information about the business cycle when making a decision about a large purchase?

What is inflation? How do interest rates affect inflation? What are the different types of unemployment? Which of these has the most impact on the economy? Explain.