Effects Of Real Estate Pricing
Real estate pricing can have a profound effect on an area. It can lead to urban decay, overcrowding and urban renaissance.
In many inner areas of large American cities, such as Harlem, the drop in demand for real estate led to a drop in prices and a resulting surplus in supply. This was largely due to the phenomenon of suburban migration. Lower real estate prices had a negative effect on the landlords who, in these adverse conditions, became slumlords. Slumlords are notorious for not maintaining their properties and letting them deteriorate into a dilapidated state. Many times, however, the property owners did not have the funds to maintain these hellish urban slums. In most of these neighborhoods, the landowners would often resort to setting the worthless and unprofitable buildings on fire in order to collect the insurance payments. This was a form of insurance fraud.
Rising real estate prices have had an adverse effect in many American cities like California. The average price of owning a house has risen significantly while the average household in come has stayed more or less the same. This has led to a large section of the potential house buying population being excluded from the market as it has pushed the dream of owning a house beyond their affordability. In Soledad, California, according to the US Census of 2000, one out of every three housing units is overcrowded.
Rising real estate prices have cause an urban renaissance in some areas. An increase in house pricing can turn formerly unprofitable properties into potential goldmines. Many landlords have renovated their now profitable properties while other properties have been purchased by developers for the purpose of renovation and resale. Thus, many downtown areas of large American cities have seen an awakening of interest in these once worthless areas, thank in part to rising real estate prices. Real Estate Tutorial
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