Three Main Causes Of Decline Of Real Estate

Real estate declineis the problem of today's world. A deep look clears that there are so many causes leading to this problem as we know that with the passage of time the family income has been accelerated to a slow pace as compared to the values of real estate. Low and moderate income leadsthe people to decline because they are unable to afford the rate of real estate. So they spend their much income in rent which leads them to decline because economic conditionof these people is already not good. In the past there were so many economicaland political factors that made the estates affordableto average manbut in these days it cannot be expected as they exist no longer. Since 1970 the comparison between low and moderate income and affordability of the estate is made clear by drawing tocurves. We find that the curve of affordable houses rises more steeply than the curve of low income.

It is awesome that in these days this is reversed and decline is apparent In this case the supply of affordable houses is the cause of another factor that is the reduction of availabilityand size of subsidiary producing a gap between what houses cost and what someone can afford to avail a new house of his own choice. Prior to1980; sAmerica was successful to subsidize and to make affordable houses. Different projects were built by using land and its value written down and written off. Low interest, long term loans and different insurance policies were provided by federal Government. They were also benefited by taxes. They covered most project costs and a little investment was required by the investors and project sponsors. In these days demand exceeded supply yet they had to face no such decline as present in the recent decade. Housing construction cost is another very important factor that is leading to the decline of real estate.

In the past material and the laborboth were in the range of average manbut now in this world of inflation the rates ofeverything are touching the sky that’s why everyone in facing this decline. Dwelling in1970 was20 to30 dollarper square foot depending on the type of house, material and the value and design of the house. In the end of decades this cost of laborand material was raised to30 to 40 dollars. In recent decade it has been raised to120 to 130 dollars which is 6 fold greater than the previous and out of the range of the people having low or moderate income. In the end we can say that the political and economical attitude of America is the main cause of leading people near to the bottom of the people. So policies of 1980 s must be adopted to get rid of the situation. Otherwise this decline will progress gradually and the whole country will have to face horrible results. An attention to keep balance between the values of different things is also required by the Government.