Econ Grapher

Housing Market

What is the Housing Market?
The housing market refers to the stock of housing in a country; the buying and selling thereof (and associated prices), and the rate of creation and destruction of the said stock. Typically analysts will monitor market statistics such as median prices (sometimes also average prices), number of days it takes for a house to sell, number of houses sold (often broken into existing vs new homes) (and no. listed for sale), and of course the construction of new houses (e.g. housing starts), and/or the net change in the housing stock, among other things. The housing market is a critical aspect of the economy and is closely affected by trends in the economy e.g. employment, interest rates, inflation, credit growth, net migration, income growth, etc.

How does it relate to Markets?
The housing market is critical to monitor in relation to the financial markets first of all in terms of the gyrations or tail events e.g. a housing market slump. This is particularly so when the financial system becomes overexposed to the housing market e.g. as in the US during the housing bust in the lead up to the global financial crisis. But of course the housing market also immediately impacts on stocks/firms that are engaged in servicing the housing market e.g. builders, brokers, investors, financiers. Indeed a lot of banks have large mortgage books, so the state of the housing market will impact the rate of growth of the lending book as well as the impairment or loan loss ratio. The housing market also impacts broadly on the economy through the consumer via the wealth effect e.g. if house prices go up then home owners will feel more wealthy and may draw down some of their home equity to buy things or trade up or down - creating a cycle of activity.

Sources and further reading:
wikinvest - U.S. Housing Market
Reuters - Housing Market
Investopedia - Housing Market Index
InvestorWords - Housing Market
New Zealand Real Estate Market
Humboldt Real Estate Economics
Numbeo - Property Markets
Wikipedia - Real estate economics

Graph Library:
Metric - Housing Market

Original Source: http://www.econgrapher.com/encyclopedia-housingmarket.html

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