The Housing as a Way of Savings: Total Prices Fall

Prices of Housing i

The Housing as a Way of Savings: Total Prices Fall

A Review of the Literature

Prices of Housing ii

Abstract

Housing is the most common way of setting aside savings for ensuring long-term stability, but is it so reliable today? According to the polls, there are very few people who consider housing to be a good investment. This literature review examines housing prices in the past, present, and future. For the problem of the paper overview, there are compared percentage changes in prices for the last four years. This examination, together with expert opinions about the future, points out the uncertainty of the current situation. Further research is necessary to corroborate or to reject any predictions about housing prices in the future for later retrieval.

Prices of Housing 1

The Housing as a Way of Savings: Total Prices Fall

A Review of the Literature

In December 2008, the alarming articles in the sections of finance and economics concerning savings1 started to appear. In the article “Where Have All Your Savings Gone?” The Economist (2008) claimed that for American and European savers “contributions to personal plans would have been better off keeping their money under their mattresses” – after all “saving seems like pouring money into a black hole” (p.11). Mutual funds’ attractiveness has been declining together with their assets. The value of risky investments, such as corporate bonds and hedge funds, has been defeated. And it is obvious that housing2, “which many people counted on for their retirement nest-eggs”, has lost value as well (p.11). More than a year ago newspapers and magazines were shouting about severity and breadth of the housing collapse. Now they are calling falling prices on the housing market to be normal. The comparison of the house-price indicators shows that the tendency is not consoling – the prices are falling and even small cessations are taken with great enthusiasm. The...