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Author: IntroBooks Team
Publisher: IntroBooks
ISBN:
Category : Business & Economics
Languages : en
Pages :
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Book Description
An element of asset bubble develops when the value of an asset, like real estate, commodities, stocks, or bonds, increases at a brisk rate without intrinsic factors, such as equivalent ever-increasing demand, to validate the spike in prices. An asset bubble is triggered when assets such as gold, stocks, or housing rapidly experience a dramatic price hike over a short period that is not sustained by the value of the commodity. The characteristic of a bubble is unreasonable optimism: a tendency when everyone is buying up a specific asset. When investors rush towards a category of assets, like real estate, it results in a rise in both price and demand. Investors carry on bidding up an asset’s price well beyond sustainable and real value in the course of a bubble. Inevitably, when prices are in a collision, the bubble "bursts, and subsequently, demand disintegrates, and the result is often significantly lowered domestic spending and dismal business and the economy's possible future downturn. Knowing the historical trends and causes of asset bubbles will prevent one from responding and falling prey to a future debacle. Illogical exuberance is a crucial indicator of a continuing asset bubble.
Author: IntroBooks Team
Publisher: IntroBooks
ISBN:
Category : Business & Economics
Languages : en
Pages :
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Book Description
An element of asset bubble develops when the value of an asset, like real estate, commodities, stocks, or bonds, increases at a brisk rate without intrinsic factors, such as equivalent ever-increasing demand, to validate the spike in prices. An asset bubble is triggered when assets such as gold, stocks, or housing rapidly experience a dramatic price hike over a short period that is not sustained by the value of the commodity. The characteristic of a bubble is unreasonable optimism: a tendency when everyone is buying up a specific asset. When investors rush towards a category of assets, like real estate, it results in a rise in both price and demand. Investors carry on bidding up an asset’s price well beyond sustainable and real value in the course of a bubble. Inevitably, when prices are in a collision, the bubble "bursts, and subsequently, demand disintegrates, and the result is often significantly lowered domestic spending and dismal business and the economy's possible future downturn. Knowing the historical trends and causes of asset bubbles will prevent one from responding and falling prey to a future debacle. Illogical exuberance is a crucial indicator of a continuing asset bubble.
Author: Paul Sau-Leung Yip
Publisher:
ISBN: 9789814623698
Category : Electronic books
Languages : en
Pages : 230
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Book Description
"This book discusses the formation of the current huge property bubbles in many Asian economies and the high likelihood of another Asian financial crisis due to the eventual bursting of these property bubbles. In particular, it explains: How the Quantitative Easing (QE) programs helped avoid a great depression after the Global Financial Tsunami; How the QE programs contributed to the formation of huge property bubbles in many Asian economies; The pricing power and hoarding power of Asian developers due to the market structure problem and the indicator effect (from new property prices to resale property prices) in Asian housing markets; The role of the market structure problem and indicator effect in the formation of the current property bubbles in many Asian economies; The important characteristics of the seeding stage, the development stage and the final stage of an asset bubble; How the understanding of these characteristics could help policy makers in pre-empting or curbing an asset bubble, and help investors in properties, shares and other assets investments; The high likelihood of an eventual bursting of the gigantic property bubbles in Hong Kong, India or another Asian economy, which would in turn trigger another Asian financial crisis; The underlying causes of the housing problems (especially high real housing prices) in Asia, and the recommended long-term solution. In view of the huge costs due to the macroeconomic policy mistakes in many developing economies and some advanced economies, this book recommends the development of a new economic discipline on macroeconomic management and rigorous selection procedures of key economic and monetary officials. If properly done, these would help pre-empt financial crises, currency crises and asset bubbles in the future."--
Author: William Quinn
Publisher: Cambridge University Press
ISBN: 1108369359
Category : Business & Economics
Languages : en
Pages : 297
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Book Description
Why do stock and housing markets sometimes experience amazing booms followed by massive busts and why is this happening more and more frequently? In order to answer these questions, William Quinn and John D. Turner take us on a riveting ride through the history of financial bubbles, visiting, among other places, Paris and London in 1720, Latin America in the 1820s, Melbourne in the 1880s, New York in the 1920s, Tokyo in the 1980s, Silicon Valley in the 1990s and Shanghai in the 2000s. As they do so, they help us understand why bubbles happen, and why some have catastrophic economic, social and political consequences whilst others have actually benefited society. They reveal that bubbles start when investors and speculators react to new technology or political initiatives, showing that our ability to predict future bubbles will ultimately come down to being able to predict these sparks.
Author: Vinay Kumar Singh
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper attempts to analyze the role of taxes on property in containing asset bubbles and its consequent recessionary impact, by developing a framework, wherein the housing market is conceived as consisting of several sub-markets i.e. rental housing market, house resale market, new construction market, housing capital market and land market, with each market having an intra-market equilibrium derived by its demand and supply function, as well as several inter-market equilibria, which get readjusted after any shock with time lags and friction. The resale market is perceived as an asset market largely governed by expectations of economic agents, who are forward looking and utility maximizing. However, the expectations are not assumed to be perfectly rational, and instead are derived by heuristic decision making amidst constraint of both information and analyzing capability, are therefore subjective and can vary from time to time. In the housing resale market, the demand as well as supply is governed primarily by future expectations of returns and additional capital gains. The capital gains have a perpetuating or exponential function, indicating a positive feedback cycle and unsustainability. The analysis of two episodes of asset bubble formation and bust, in Japan, in 1980s and in United States, in recent years, with the aid of this framework shows that the asset bubble-bust can be explained using this framework, and there does not appear any inconsistencies between the theoretical framework and the empirical evidence. Both the asset bubbles show evidence of positive feedback cycles indicated by a phase of exponential growth that seems to have resulted from the positive feedback created by the self realizing expectations of market participants. In both the episodes the bubble appears to have been finally busted by the falling 'affordability' that was a result of rise in prices, thereby indicating an inherent unsustainability in the positive feedback dependent bubble-bust cycle, which is captured in the framework. The analysis of tax measures related with property using the framework shows that empirical evidence of the incidence of taxes and their impact is largely consistent with the results obtained with the framework, and with its use it is possible to reconcile some of the differences in views, including those between the traditional and the new-capitalist view of property taxes. The analysis of taxes allows an easy way to analyze the impact of taxes in the development of asset bubbles, and also differentiates between tax measures that are pro cyclic and those that are counter cyclic. From the analysis, it is observed that deductibility of interest and capital gains tax can have a strong role in the development of asset bubbles. Capital gains tax has a complex impact as its reduction raises the expectations of capital gains which are central to the housing price in an asset resale market, while its increase causes a lock-in, which also increases the prices, indicating that its Impact on house/land prices may differ from time to time. It is observed that tax design plays an important role, by varying the effective tax rate, often widely among the taxpayers in the same jurisdiction, and that erosion of the tax base by rising prices can make the property taxes pro cyclic and aid development of bubbles. The analysis of tax measures in the two asset bubble episodes indicates that the tax environment may have significantly contributed to the development of asset bubbles, and that more informed tax policies can have a role in preventing asset bubble development in future. More elaborate analysis of tax incidence and impact, and efforts for developing a model that allows quantitative estimation of the impact of taxes in asset bubbles are recommended for further research.
Author: Donald Rapp
Publisher: Springer
ISBN: 1493910922
Category : Business & Economics
Languages : en
Pages : 374
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Book Description
This book deals at some length with the question: Since there are many more poor than rich, why don’t the poor just tax the rich heavily and reduce the inequality? In the 19th century and the first half of the 20th century, the topic of inequality was discussed widely. Ending or reducing inequality was a prime motivating factor in the emergence of communism and socialism. The book discusses why later in the 20th century, inequality has faded out as an issue. Extensive tables and graphs of data are presented showing the extent of inequality in America, as well as globally. It is shown that a combination of low taxes on capital gains contributed to a series of real estate and stock bubbles that provided great wealth to the top tiers, while real income for average workers stagnated. Improved commercial efficiency due to computers, electronics, the Internet and fast transport allowed production and distribution with fewer workers, just as the advent of electrification, mechanization, production lines, vehicles and trains in the 1920s and 1930s produced the same stagnating effect.
Author: Lance T. Griffin
Publisher: Createspace Independent Publishing Platform
ISBN: 9781546674634
Category :
Languages : en
Pages : 36
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Book Description
Property Investing - The Property Cycle Boom or Bust in the Property Market. The Real Indicators of Boom or Bust in the Property Market. Every investor in property needs to identify the signs of a coming BUST. This book aims to enlighten those investors so they can prepare in advance for any financial disaster related to a decline in property prices. Be Warned - The Data Contained within this Publication may save your Property Portfolio A property bubble or asset bubble relates to an asset at a price or price range that strongly exceeds the asset's intrinsic value. A potential cause of property bubbles is extravagant pecuniary liquidity in the financial sector, accelerating lax or inappropriate lending standards by banks and other financial institutions, such as low doc or no Doc loans, which makes markets susceptible to volatile asset price inflation. This is stimulated by short-term speculation. As with any type of economic bubble, it is often claimed that a real estate bubble is difficult for many to identify except in hindsight, after the crash. When house prices have been steadily increasing over a long period of time there may be a delusive perception that this rise in prices will persist eternally and that investing in property is relatively free of any risk. Not true... When this false belief that property prices can only go up is instilled into a community there develops a mindset to purchase as much property as possible, as quickly as possible before this investment opportunity becomes unaffordable. But, it is a certainty that eventually the demand will decrease, and prices will start to decline. So, it is important to be able to identify the indicators that can help anticipate that a decrease in demand is imminent.
Author: Sergi Basco
Publisher: Springer
ISBN: 3030005879
Category : Business & Economics
Languages : en
Pages : 102
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Book Description
“This book provides an accessible, yet formal framework to understand how housing bubbles arise, their international dimension, their consequences, and ways to prevent them.” Òscar Jordà, University of California, Davis, USA “Basco’s analysis blends, in a very rigorous but enjoyable manner , state-of-the-art theory and historical examples, adding also a very timely and valuable set of policy orientations.” Óscar Arce, Director General, Banco de España, Madrid, Spain Booms and busts of house prices are a recurrent feature throughout history. This book provides a comprehensive overview of the origins and economic consequences of these housing bubbles. The book starts with a formal definition of asset price bubbles and a summary of the most famous episodes, before describing how economists have thought about asset price bubbles; specifically behavioral vs. rational interpretations. These theories are applied to the special case of housing and the same framework is used to explain the implications of financial globalization for capital flows and housing bubbles. After analyzing its origins, the economic consequences of housing bubbles for both households and firms are derived and documented. The final sections are devoted to discussing the effects of financial crises and explain how financial regulation could mitigate the emergence of future housing bubbles. Case studies of the recent housing bubbles in the United States and Spain are also featured in the book. This book will be of value to advanced undergraduate macroeconomic courses, as well as researchers in international economics and macroeconomics and policy makers.
Author: Chris Brooks
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper investigates whether the prices of UK equity-traded property stocks over the past fifteen years contain evidence of a speculative bubble. Speculative bubbles are generated when investors include the expectation of the future price in their information set. In the presence of speculative bubbles, positive expected bubble returns will lead to increased demand and will thus force prices to diverge from their fundamental value. The present analysis draws upon the methodologies adopted in various studies examining price bubbles in the general stock market. Fundamental values are generated using two models: the dividend discount and the Gordon growth. Variance bounds tests are then applied to test for bubbles in UK property asset prices. Finally, cointegration analysis is conducted to provide further evidence on the presence of bubbles. Evidence of the existence of bubbles is found but these appear to be transitory and concentrated in the mid-to-late 1990s. Investors in property stocks should be aware that in periods when bubbles are present the market does not move on the basis of the fundamentals and abrupt price corrections can occur.
Author: David Lereah
Publisher: Crown Currency
ISBN: 0385515278
Category : Business & Economics
Languages : en
Pages : 300
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Book Description
Are You Missing the Real Estate Boom? author David Lereah, chief economist for the National Association of Realtors, asks. We are experiencing a historic wealth-building opportunity. To ensure that your don’t miss out, Lereah provides the tools, information, and analysis you need to become a savvy real estate investor. And he shows how to integrate real estate into your overall investment strategies and financial planning goals. Among the information you’ll find in the book: How to become a master at dealing with real estate agents, brokers, and lenders. Which home improvements will result in the greatest long-term gains. How to identify the vacation homes and regions that will increase the most in value. How to finance a first-time home—with or without a big down payment. Why will the real estate boom continue into the next decade? Low interest rates are part of the story. Although mortgage rates have notched up slightly over the last year, they still remain historically very low. Technological advances from online real estate listings to automated underwriting to an explosion of financing options have reduced home ownership costs and simplified the process of buying and selling. Continued high demand from baby-boomers buying larger homes, second homes, and retirement homes, and a new wave of immigrants and “echo” boomers buying first homes, ensure that the boom will continue into the next decade. The long-term fundamentals for housing remain strong into the foreseeable future, claims Lereah. Far from a real estate “bubble,” what we are experiencing today is a phenomenon that takes place only once every other generation: a long-term real estate market expansion. Isn’t it time you started taking advantage of it today? Are you missing the real estate boom? Can you increase your wealth from it? For most people—including current homeowners—the answer is a resounding yes. But it’s not too late to increase your stake in the greatest real estate boom of our generation. Whether you are a first-time buyer or already own your home, Are You Missing the Real Estate Boom? will show you how you can dramatically increase your overall wealth. Author David Lereah, chief economist for the National Association of Realtors, shows why the real estate market is poised to climb higher over the next decade—and explains what you can do to profit from it. Lereah calls today’s market a “once-in-every-other generation opportunity.” Today's boom is not just driven by low interest rates—there are a host of demographic and economic reasons why real estate will continue to outpace other investments, from the growing needs of the baby-boomer generation and the rise of the “echo” boomer generation to the new ways real estate is marketed and sold. Are you a first-time buyer? A current homeowner considering whether or not to trade up? There has never been a better time to do so, Lereah convincingly claims. In Are You Missing the Real Estate Boom?, Lereah explains what to look for when you’re buying a home; which improvements add the most value to your current home; what to consider when purchasing rental properties; how to evaluate real estate investment trusts (or REITs); and the pros and cons of second homes. Full of detailed information on how to work with a real estate agent and a mortgage lender, how to analyze local markets and regional fluctuations, and how to best finance your investment, Are You Missing the Real Estate Boom? offers readers the seasoned advice they need to invest with confidence and reap outsized rewards.
Author: Kieran Trass
Publisher: Penguin UK
ISBN: 1742288154
Category : Business & Economics
Languages : en
Pages : 170
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Book Description
After a long-running property market boom, all indications are that New Zealand is facing at least half a decade of slow or declining values. This trend is mirrored in most countries across the globe. Kieran Trass, real estate investor, advisor and commentator, reassures us that yes, we can still make money at all stages of the property cycle - slump, recovery and boom. The key is having the right knowledge and information. The Housing Bubble addresses all your real-estate questions, including:'How will we know when the slump is coming to an end?''When is it a good time to buy?' and'When will we see market recovery?
