The Homeownership Rate and Interest Rates

The Homeownership Rate and Interest Rates
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The Homeownership Rate and Interest Rates
During economic boom and growth, households and individuals have higher disposable income, and there is likely to be a growing demand for houses. When there is higher demand than supply, there will be upward pressure on prices. On the contrary, oversupply, there is downward pressure on prices. It is hypothesized that the growth in homeownership in the US is closely linked to access to credit and higher income levels. Houses are durable goods and are mostly priced higher than the average annual household income. As such, purchasing homes often require some form of financing, the most common being the mortgage changes in the sale of houses over time are a good indicator of the demand for houses. The behavior of house prices is based on demand and supply. Prices are an essential signal in the real estate market, and prices are what people buy and what should be constructed. The multiple regression analysis examines the relationships among, interest rates, income, unemployment, and the interest rate, unemployment rate, and GDP growth on homeownership rate the dependent variable
Homeownership
The proposed topic focuses on whether the interest rate, unemployment rate, and GDP growth affect the homeownership rate in the U.S. in the period 1960-1990. The homeownership rate has ranged between 63 to 69% in the study period (U.S. Census Bureau, 2021). While income growth and changes in the cost of housing influence changes in the residential housing market, it is more challenging accessing accurate and updated access data on these variables. There is an assumption that income levels determine whether individuals and families can afford houses, as those in the high-income brackets are more likely to afford them. Similarly, having a high disposable income makes it easier to save and invest. When the economy grows, there is lower unemployment and greater demand for housing as more people can access mortgagees.
Interest rate
Homeownership rates vary across states, cities, and rural areas, but generally, homes are more expensive in cities. Homeownership is one of the ways to build wealth in the US, but housing costs are a hindrance to homeownership. Interest rates affect borrowing costs, and when interest rates are high, fewer people are likely to afford homes and seek mortgage financing in expensive cities with high populations. The effective federal funds rate, which is the interest rate that banks and other depository institutions charge for loaning funds overnight, reflects the interest rate (US Fed, 2021). Owner-occupied houses are sensitive to changes in interest rate, and especially between the minority and nonminority households (Franjo, 2015). There is a tendency for bigger deficits in housing stocks, such as the case of west coast American cities. Thus, considering how interest rates and housing transaction costs affect homeownership rates can offer insights into how different policies affect housing. Differences in tax policies also affect the willingness of real estate investors to build and increase the quantity of housing stock...