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The Market Equilibrating Process


The Market Equilibrating Process

Demand is the quantity that consumers are willing to pay and demand depends on factors, such as consumer's likes and dislikes, prices, and substitutes. Today’s society is obsessive with their desires, needs, and wants, which has the nation's supply on the current crisis in the housing market.

In short, whereas house prices are rising, the demand exceeds the supply. Development was booming, credit was easy because people were able to take out loans against the equity in their homes. The value on homes at the time were high because of extensive demand, and many consumers were investing in homes they had no intention of occupying, and may not even cover the expenses on the rent.

Speaker Nancy Pelosi states “Consumers were expecting the market to keep going up. Unfortunately, the value on homes fell quickly. Problems in the subprime mortgage markets had a hand in pushing the housing market into its worst slump in 16 years. As many as two million Americans will see their mortgage rates increase in the next two years, with many of them losing their homes as a result of bad lending practices. Home foreclosures shot up to an all-time high. As a result to the housing slump, tens of millions of homeowners could see the value of their home drop in value” (Speaker Nancy Pelosi,).

The wave of foreclosures, consumers were losing their homes, and people could not pay their mortgages. Many people became homeless or moved in with family members or friends. Investing in homes and real estate came to an abrupt stop. Supply outdid the demand, and prices fell (Speaker Nancy Pelosi).

President Barack Obama pledges up to $275 billion dollars to help stem the wave of home foreclosures, this bill is part of a broad effort to push the country out of recession.

Up to nine million families had the chance to refinance their mortgages under the plan, administration officials...