The Real World of Real Estate

房地產達人This month’s expert explains the cost and value of home. Understanding the cost and value of home本月邀請專家來解釋房屋的成本和價值 by Simon Stopps

Mike Zai, a veteran of the American housing bubble, currently works as an analyst for a New York-based hedge fund company.

SC: Why are houses such an important part of the economy?
MZ: Houses play an important role in the economy because average consumers store most of their net worth in real estate. They are also important because people don't just invest in houses; they also live in them.

SC: What pushes housing prices higher?
MZ: House prices are typically driven by a number of factors including inventory levels, interest rates, employment rates and income levels. Sometimes, governments initiate programs to keep home prices at a certain level.

SC: What is a housing inventory? What affects it?
MZ: The term housing inventory refers to the number of houses that are being sold on the open market. Housing inventory typically includes newly built homes, older properties being sold by their owners and properties that lenders obtain through foreclosure. When there is a high demand for houses inventory is low because people are buying houses as soon as they are put up for sale. When demand is low, inventory is high because houses aren't selling and are staying on the market longer.

SC: What is a housing bubble?
MZ: A housing bubble is an economic situation that occurs when home prices rise faster than inflation and income. Housing bubbles happen when there's a high demand for homes in a particular area. In a bubble, investors purchase homes in hopes of flipping them for a profit after they appreciate in value.

SC: How does a housing bubble affect homeowners?
MZ; Home prices become so artificially high that peoples' monthly incomes cannot pay for the mortgages on their properties. People keep buying houses, though, because they think the risk of paying a high mortgage will pay off if they can sell at a profit.

SC: How is the situation corrected?
MZ: housing bubbles are resolved when income levels rise to match the high cost of homes or when home prices fall to match income levels. Usually, home prices fall because income levels are much less volatile than home prices. When people cannot afford to pay their mortgages anymore, their homes go into foreclosure and are sold for less than the market price. This, in turn, causes the prices of the market to decline.

More Information:
When it comes to real estate bubbles, thee are two different schools of thought. One group of economists say bubbles cannot be identified, they are a natural part of an economic cycle and so, should just run their course. Another group says bubbles can be predicted, because they affected economy in such a negative way, should be controlled and prevented-if possible.

Grammar Tips:
.....investors purchase homes in hopes of flipping them for a profit after they appreciate in value.
"in hopes of " = to expect or wish for something.
*Investors purchase homes and expect to flip them for a profit after they appreciate in value
"in hopes that"-
David bought an expensive gift for his wife in hopes that she would change her mind about not going fishing with him.
"in the hope of" -
In the hope of a better tomorrow. Let's work harder at making our planet a cleaner and safer place to live.

Vocabulary Tips
inventory-存貨，存貨清單
*The car dealership has a large inventory of used cars.
*Our boss told us to take a comprehensive inventory of our goods. 商品存貨做全面清點
*The company had a sale and sold most of their inventory.
open market- 公開市場自由銷售open-公開
*We intended to sell our house to our friends or family, but now we've had to put it on the open market. 公開出（求）售
foreclosure-bank or lender taking back the house. 取消贖回權。
*Wesley hasn't paid his loan for months, and is now facing foreclosure.
*The foreclosure procedure will take 2 months.
flip-turn.翻轉，抛，擲
flipped/flipping-
*I lost my place in the book because the wind flipped my pages as I was reading.
*Let's flip a coin to decide who wins.
mortgage (n)-貸款，房貸或抵押．＂＂不發音
*Sandy finally paid off her mortgage.
*The monthly mortgage payment of this house is over $1000.
Mortgage (v)-向銀行或貸款公司貸款．
The house was mortgaged a second time.
volatile-波動，不穩定．change very fast
*Experts advised withdrawing money from the volatile stock market.
*Currency exchange rates have been volatile lately.
decline-decrease, go down

Chat Room
house-hunting-（想買房子）而找房子
hunt-獵取，打獵，或物色，尋找。
half bathroom=powder room- without bathtub or shower, only toilet and sink.
full bathroom-with bathtub or shower.
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bubble-泡沫，幻想，不實際的希望．
housing bubble-房市泡沫．
burst someone's bubble-戳破某人的泡沫，即潑某人的冷水，或掃某人的興．
bubbly-活潑，（友善的，很快活開朗的）
Ashley has a bubbly personality.　有活潑外向的個性．