Property Economics Essay Example | Topics and Well Written Essays - 500 words

Property Economics - Essay Example The homeowners who planned to sell the properties were unable to sell due to a massive fall in prices that led to â€Å"upside down" mortgage. Notably, the mortgages were greater than the property resulting in reduced incentive for homeowners. The graph below indicates the trends in housing sector prices (Sanders, 2008). The housing sector experienced the bubble leading to the eventual collapse of the subprime mortgage market. The subprime mortgages are provided to homeowners with below-average income (Christopher et al., 2008). With the trend in the housing sector, there was a need to engage in more subprime mortgages. Consequently, this led to mortgage delinquencies and foreclosures that caused the devaluation of the housing-related securities (Sanders, 2008). Therefore, there was the reduction in business investment and household spending. Notably, these experiences were dominant in regions with high household debt and highest housing price decline (Immergluck, 2011). The increase in interest rates resulted in global investors reducing their purchases of the mortgage-backed debt while the securities found it risky to continue with the lending (Sanders, 2008). Subsequently, the mortgage crisis was a major factor that worsened the effects of the Great Recession in America (Christopher et al., 2008) . Immergluck, D. (2011). The Local Wreckage of Global Capital: The Subprime Crisis, Federal Policy and High-Foreclosure Neighborhoods in the US. International Journal of Urban and Regional Research,