Reaction to the recent fall of home sales in the US

In response to the topic presented in this link, of all the economics topics to appear in my news feed, the timing of this one couldn’t have been any better. We just had our lesson on the recession and this bit of news is directly related to it. So, the prices of houses in the United States are falling. No surprise there. This was expected, considering the housing boom they had a few years back. Investors put too much of their investments on houses and banks became lenient to the point that they let people with bad credit balance make housing loans. Bad move of their part. Added the fact that they overbuilt, it “should” have been expected that there would be a surplus of houses the moment the housing craze ends. Perhaps it was expected. Perhaps the economists knew. After all, they are experts in this field. They should have foreseen something like this the moment the housing craze spread like wildfire throughout the country. I know some housing or real-estate organizations seek out the opinions of professional economists. I can only presume that these so-called professionals have given some sort of warning. Perhaps these organizations chose to ignore it? That might be, considering that the money earned from the returns of such large investments would seem tempting indeed. And of course, as with all booms, the bubble has to burst at some point or another.

Now, I have read a few other articles that talk about a similar topic, particularly about the fairly recent economic recession of 2006. These articles claim that one of the causes for the recession was because of financial institutions and individual money lenders hiding the risk involved in making such big economic decisions and empowering themselves by fooling investors. Whether or not this is true, the fact is that they really did invest too much in housing. The way I see it, they were too ambitious and invested heavily on something during the time of an economic boom and when it ended, repercussions were felt throughout their entire economy.

The effects of the previous recession would haunt the housing market as the memory of the suffering felt during the time is still fresh in the minds of many. Because of this, people would no longer be willing to buy. If they’re unwilling to buy, the country’s economy falls. If the economy of the country falls, we too are affected. We would feel the effects of the recession because of globalization. As the countries in the world are part of the worldwide economy, the fall in one will lead to serious fluctuations in another. If this continues, the way I see it, another recession will be inevitable.