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Essay / Research Paper Abstract
This 3-page paper focuses on purchasing a house as a decision of economics. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MThouseeco.rtf
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Unformatted sample text from the term paper:
involves more than simply selecting the house, finding a lender and moving in. A great many economic principles, and decisions, should go into the entire process.
Discuss which principles of economics directly relate to your purchasing decision. The principles of economics here can range from supply and demand, to opportunity costs.
Ellis (2007) discusses information regarding the latter, assuming that the choices of home ownership are renting versus buying. When it comes to actual comparisons, he points out that renting is
actually less expensive, as maintenance, insurance and property taxes typically dont shoe up on rental agreements. Furthermore, he points out that examining a homebuyers monthly expenses - Ellis notes that
costs such as insurance, property tax and maintenance are not ever going to come back as an investment. In fact, during the first five years, approximately 80% percent of mortgage
payments go toward interest alone (Ellis, 2007). The other economic principle we need to consider here is supply and demand - when
there is a lot of housing supply, prices tend to be lower (and sellers are more willing to do buyers biddings). However, if there is not much supply on the
market, or demand is huge (as it was during the mid-2000s, then prices will be higher and product harder to find.
Compare the marginal benefits and the marginal costs associated with your purchasing decision. Before the economy went south beginning in 2007, most Americans believed their houses were "their best and
most important investments" (Hilsenrath, 2010). However, according to Karen Pence of the Federal Reserves household and real estate finance research group, homes are terrible investments, as theyre indivisible assets, transaction
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