The article addresses that the housing market remains robust in the economy that is characterized by sluggish wage growth, volatile stock market and higher oil prices that depress the consumer spending. The author highlights the shares of home price tracker Zillow and Pulte (PHM) and KB Home (KBH) home builder stocks that justify the robust housing market. Nonetheless, Monica asserts that the experienced higher earnings Home Depot (HD) and Lowe’s (LOW) have been instrumental in describing the growth of the housing market (La Monica).
La Monica contends that the trickle up effect compels the consumers spending to increase as a result of the wealth effect from a turnaround in housing sales and home prices. La Monica argues that the progress of the luxury home builder Toll Brothers (TOL) narrates the present upbeat guidance in the housing sector. On the economic viewpoint, in trickle-up effect, the wealth is dispersed to the poor and middle class in expectations that it trickles up to the affluent individuals (La Monica).
La Monica addresses that it is important that the housing market is useful for other beaten down banks in the oil market. The article concludes that if Federal Reserve Interest Rates rise than anticipated then the potential homebuyers will be forced to respond faster before the mortgage rates increase (ibid).
One of the questions related to the housing market article is ‘why don’t we leave assisting the filthy rich and strive assisting the rest of us? ‘One argument is that there are fewer politicians who are viewing to address that the financial system should be operated for the benefit of the wealthy individuals. Such a policy is ineffective because it allows the depriving of finances from the rest of us to the firms and endowments. The best proposal is that the Federal Reserve should increase the rates. The other question is ‘what are the benefits of trickle up effect.’ The economic concept will be associated with negligible effects on the credit crisis because it will target the poor.
References
La Monica, P. R. (2016, May 25). The housing market is suddenly hot again - May. 25, 2016. Retrieved from http://money.cnn.com/2016/05/25/investing/housing-market-economy-stocks
