How well or bad the economy does is in large part measured by the housing market. When the housing market is good the economy is good. When it is bad the economy is bad. When it is good houses are getting built, banks lend money, and people are buying homes.
When houses are not being built there are a lot of people affected. People in construction are not hired and therefore they do not make money to support themselves or their families. Companies that sell material to build houses do not make money so they cannot hire more people.
The companies that manufacture house building materials do not get orders so they have to lay off people in their manufacturing plants. Banks do not lend money so they have to keep their interest rates high. With higher interest rates people do not borrow as much money and this makes it hard for people to get a loan and then people cannot buy houses.
It is a self defeating merry go round. Much of our economic situation is all about the home market. But as many real estate agent knows it has its ups and its down times. The government is very involved in the housing market. Many government regulations control the house market. The government for all intents and purposes controls everything from house construction to the money lending business that funds home purchases.
The government controls the mortgage broker and puts in place the rules banks must follow in order to lend money. The government dictates the rules real estate agents must follow. Our government can build up house sales by offering incentives to buy like the first time home buyer tax credit. The government also provides income tax savings for all home owners. If you own a home and are making loan payments you can write off the interest you pay on the loan off your income tax bill.
This is such a tradition that it is a primary reason people want to own a home. We just assume this income tax benefit and take for granted the tax benefit. If reality it is the way government takes control of the house market. There are so many aspects that make up our economy. But in no other aspect is there the government influence like there is in the housing market.
Why is this so? Perhaps they know that the stability in home ownership keeps people busy. People are too busy paying for their homes that they have no time to question the government. Or perhaps they think that the part about the pursuit of happiness and all that starts in the home.
Whatever the reason the housing market is the government. And whether that is good or bad depends on how you look at it. The housing market will always have its good times and its bad times. It will always have people who try to make a killing in the market and those who simply want to own a home and raise their family. And the government will always be there controlling the market.
When you’re deciding to buy a house, some of the factors that you have to take into account are mortgage rates. As mortgage rates are important for home-buyers, rates GIC are important for investors. If you’re interested in a customized financial plan, remember to visit us.