New House Economy

New House - Economy

Kevin Allen

Xeco/212

October 12, 2012

Jonathan Keisler

New House - Economy

The strength of the economy as a whole could affect the marginal benefits and the marginal costs correlated with my decision to purchase a new home in different ways. For example, since the economy has been in recession for roughly the last 11 or 12 years the Federal Reserve has created stimulus programs in attempts to steady economic circumstances in America. “The central bank said it would immediately start buying billions of dollars of mortgage-backed securities — essentially bonds that are made up of a bunch of home loans, packaged and then sold to investors” (Lee, 2012, para. 2). It is stimulus programs such as this that will get people back interested in purchasing homes, but at the same time I will still be dreadful of making a commitment of this magnitude because the economy’s future is still uncertain.

The tax deduction for mortgage interest is one of the reasons that many people consider purchasing a home. If this deduction were to be stripped away in our current economic state the housing demand will decline causing housing prices to drop even lower. I would definitely take this in to consideration. Although I am not too old to successfully pay off a mortgage, the current economic downturn has me hesitant to invest in a home at this time.

Other changes in government spending and taxes will also affect my decision. For example, if the...