The slow down of the housing market severely affects the financial market, and the economy, slowing down the number of foreclosures may be the first step in the recovery of the housing market Sprague (2008). As a first step, Banks should tighten their lending requirements and increase the interest rates to discourage people from borrowing to purchase new homes. However, lending to eligible applicants has to commence again. A combination of these two actions will help reduce the inventory of homes on the market and stabilization of house prices. Drop in inventory of homes will spur increase in the construction of new homes, improving cash flows and employment, and increased spending on housing and private construction. However, realization of the benefits of such actions will take some time.
Statement of the problem
The present financial crisis has caused the rise and fall of housing market in most countries worldwide. Housing presents five to ten perc
ent of the economy in most countries therefore the rising and falling of price in the world affects the liquidity of the market. The rise of house prices have led to collapse of mortgage homes and reducing consumer spending. A provision of reasonable housing to the people of mixed income has become a challenge of many governments and now it is up to developers to come up with structures that can sustain this housing problem.
There is a rise and decrease in low income housing causing house rent to go up consuming up to 70 percent of poor homes total earnings. Therefore availability of cheap and easy mortgages will enable real estate developers come up with cheap housing that will provide better housing to the poor people.
Objectives
The main aim of the research is to find out the effect of provides sector investments in price control in the housing sector. The paper shall also find out the impact of mortgages on development of housing sector.
Hypothesis