Econ Paper

Submitted By mattmurphy18
Words: 346
Pages: 2

In the article “The Great Housing Rebound of 2012,” Christopher Matthews discusses how there is hope for Americans in the housing market, and on how the Federal Reserve is the most important factor in increasing home prices. Matthews argues how unemployment plays a large role in the housing markets recovery, and how in order to have higher prices, buyers need to be able to make enough money to afford the house. Unemployment needs to decrease in order for America to truly be a strong economic force in today’s world. When the housing market is back to its peak, other industries will benefit greatly. For example when the market for houses increases, so does the market for furniture because these are complementary goods. As a result of this the economy will grow, and add jobs to those specific fields of work. Matthew states, “Rising home prices allow lenders to be more generous with home financing, which allows even more prospective home buyers to access the market, further driving up home prices.” This is true because when more people are able to afford houses due to more generous loans, the market increases. When the market increases there is more competition between sellers. When more buyers enter the market, the room for economic growth increases. This gives investors an incentive to go out and spend money, which also helps improve the economy. A major concern in raising home prices is the unemployment rate, and the fact that people do not take home as much money as…