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Evidence From Data Analysis, Fifteen Developed Countries and the United States Home Prices Increase Between 1990 to 2006 Result of Advancement In Technology, Worldwide Economic Collapse and Great Recession Res
Abstract
Based on the findings of the current study, policymakers must take a hard look at the media and themselves, because the world can no longer blame the subprime mortgage industry for causing the Global Financial Crisis of 2007 and 2008. The public must demand answers from the media and policymakers explaining how an economic crisis that could have been avoided resulted in the collapse of the global economy. The lack of evidence supporting the theory of a financial bubble and a real estate bubble called for further investigation of factors leading to the Global Financial Crisis of 2007 and 2008. Evidence presented from data analysis in Walters (2018) suggested no financial bubble existed in developed or developing countries around the world, preceding the Global Financial Crisis of 2007 and 2008. Based on data analysis in Walters (2018) the evidence also suggested, the lasting effect of economic policies in response to the Global Financial Crisis of 2007 and 2008 for both developed and developing countries around the world, had no significant impact on the financial sector but pointed to a lack of economic growth. The findings raised significant questions about the existence of a real estate bubble in both developed and developing countries. Evidence from data analysis presented in Walters and Djokic (2019) suggested the existence of a real estate bubble in the United States real estate market preceding the Global Financial Crisis of 2007 and 2008 was a false conclusion. Data analysis in Walters (2019) resulted in, 0.989 Adjusted R-square, 194.041 Mean Dependent Variable, 5.908 Square Error of Regression, 488.726 Sum-of- Square Residual, and 0.00000 Probability (F-statistic), for correlation between the independent variable representing advancement in technology, and the dependent variable representing home purchase price in the United States preceding the Global Financial Crisis of 2007 and 2008. The findings in Walters (2019) concluded the rapid increase in home purchase price in the United States real estate market, was due to increased demand for homes from the adaptation of advancement in technology in the real estate and mortgage industries. The current study expanded the investigation of the growth in home purchase price to fifteen developed countries around the world, building on the findings of previous research by the current researcher. The researcher in the current study concluded, the existence of significant and near-perfect correlation in many cases, between the dependent variable representing growth in home purchase price, and the independent variable representing advancement in technology. The analysis was based on data analyzed from fifteen developed countries around the world, which was collected between 1990 and 2006. The data analysis included home purchase price data from, Canada, United Kingdom, Denmark, Finland, France, Italy, New Zealand, Sweden, Netherlands, Australia, Ireland, Belgium, Norway, Spain, and Portugal. Data preceding the Global Financial Crisis of 2007 and 2008 were analyzed in the current study. The researcher in the current study concluded the existence of overwhelming evidence suggesting advancement in technology was responsible for the rapid increase in home prices in developed countries around the world preceding the Global Financial Crisis of 2007 and 2008. The result of data analysis in the current study provided further confirmation of the accuracy of former Federal Reserve Board Chairmen, Alan Greenspan and Ben Bernanke 2005 assessment which concluded, the occurrence of a real estate bubble developing was impossible due to the Efficient Market Hypothesis, before reversing course subsequent their assertion in 2005 (Belke & Wiedmann, 2005; Starr,2012). The result of the current study provided additional evidence supporting Eddison Walters Risk Expectation Theory of The Global Financial Crisis of 2007 and 2008. The result from data analysis also confirmed the need for the adaptation of Eddison Walters Modern Economic Analysis Theory. As a result of the findings in the current study, the researcher concluded the development of a real estate bubble is impossible where there exists real estate price transparency, as is the case in most developed and developing countries. The researcher presented Walters Real Estate Bubble Impossibility Price Transparency Theory based on the findings. False information of a real estate bubble and predictions of a real estate crash disseminated through the mainstream media and social media can be a destructive force with a disastrous effect on the economy around the world. The failure by the media to hold themselves and policymakers to a higher standard resulted in the Global Financial Crisis of 2007 and 2008. The result of the failure by the media was a worldwide economic crisis and the Great Recession that followed the Global Financial Crisis of 2007 and 2008. Lessons learned from the Global Financial Crisis of 2007 and 2008 can assist in preventing another economic crisis in the future.
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Data analysis in recent studies by the current researcher presented evidence suggesting the existence of a real estate bubble preceding the Global Financial Crisis of 2007 and 2008 was a false conclusion. Data analysis from Walters (2019) resulted in 194.041 Mean Dependent Variable, 0.989 Adjusted R-square, 5.908 Square Error of Regression, and 488.726 Sum-of-Square Residual, from nonlinear regression analysis with the independent variable of “advancement in technology”, which proved to be the most significant factor causing the dependent variable of “home purchase price” to increase preceding the Global Financial Crisis of 2007 and 2008. Based on the findings of data analysis in Walters (2019), the researcher concluded the data confirmed the assertion agreed upon by Alan Greenspan and Ben Bernanke, it was impossible to have a real estate bubble, while citing the Efficient Market Hypothesis in 2005. Subsequent to 2005, alternative attempts to explain the existence of a real estate bubble were made by both former Chairmen of the Federal Reserve Board. Subprime lending and low interest rates were ruled out as the cause of the Global Financial Crisis of 2007 and 2008 in Walters (2019). As a result of the findings from Walters (2019), further investigation to gain an understanding of the impact of how the rapid adaption of advancement in technology influence on the rapid increase in home purchase price preceding the Global Financial Crisis of 2007 and 2008 is required. The purpose of this study is to gain an understanding of the role the rapid adaption of advancement in technology played in the mortgage industry and real estate industry in the United States, and the influence on to the rapid increase in home purchase prices preceding the Global Financial Crisis of 2007 and 2008 as a result of the changes. Insight into the rapid transformation of the mortgage industry and the real estate industry in the United States, and the role the transformation played in the crisis is a critical factor to understanding the impact of advancement in technology on the real estate market in the United States preceding the Global Financial Crisis of 2007 and 2008. Failure to consider the impact of rapid adaption of advancement in technology on the mortgage industry and real estate industry, and the transformation of the real estate market preceding the Global Financial Crisis 2007 and 2008, was a significant error which led to the false conclusion of the existence of a real estate bubble. An understanding of how the rapid transformation of the real estate market as a result of advancement in technology in the United States preceding the Global Financial Crisis of 2007 and 2008, will provide the critical knowledge to evaluate mistakes leading to the false conclusion of a real estate bubble preceding the crisis. The information gained from the current study will help avoid a future financial crisis of the same magnitude.
The results of several recent studies called the analysis of economic data from the United States real estate industry preceding the Global Financial Crisis of 2007 and 2008 into question. Advancement of technology is a disruptive force throughout the economy today. The speed at which technology continues to evolve has resulted in significant changes throughout the entire economy around the world. As technology continues to evolve, there is no question technology disruption will continue to occur. Economist can no longer rely solely on backward-looking historical data when conducting economic analysis.
The findings of the current study provided insights into changes in the growth of net FDI
inflow, GDP, and international trade export around the world between the period from January 2000 through December 2006 and January 2010 through December 2016, representing periods preceding and subsequent to the Global Financial Crisis of 2007 through 2008. The study is critical because economies around the world have become more globalized, and the findings significantly add to the body of literature in both international trade and international finance. The researcher analyzed 980 data points on each of the three variables: net FDI inflow, GDP, and export of goods and services, totaling 2,940 data points. The findings provided an understanding of economic changes in the aftermath of the Global Financial Crisis of 2007 through 2008. The researcher analyzed data from 7 years before and 7 years after the Global Financial Crisis of 2007 through 2008. The information gained from the study of the Global Financial Crisis of 2007 through 2008 may assist organizations as they position themselves to compete in the global economic environment. The findings of the study provided critical information, organizations in both public and private sectors may utilize as they make critical decisions to position themselves in the global economy.
No Real Estate Bubble Preceding Global Financial Crisis: Eddison Walters Risk
Expectation Theory of the Global Financial Crisis of 2007 and 2008
This paper investigates the relationship between real estate market transparency (RET) and default on mortgages (DOM). Using data from 46 countries for the period of 2006–2016, we find evidence that there is a negative and significant relationship between RET and DOM. This result is robust with the inclusion of control variables and different estimation methods including panel fixed effects and generalized method of moments (GMM). We also find that the association between RET and DOM is more apparent in emerging economies than high-income countries.
Because of a dramatic decrease in transportation and telecommunication costs, the digital revolution, and the forces of globalization, off-shoring has accelerated in the past few years. While there is little doubt that off-shoring has brought hardship to thousands of workers and communities, there is also little doubt that it has benefited many worker and communities. Today, off-shoring continues to generate considerable debate on the long-run impact. Also, there is considerable misunderstanding about this phenomenon. In this paper, the authors make a distinction among the terms outsourcing, offshore outsourcing, and off-shoring. Off-shoring has been facilitated by a deconstruction of the value chain, allowing firms to evaluate all activities as potential candidates for being performed outside the firm. Reasons for the acceleration of off-shoring are outlined. An explanation of why off-shoring is not a villain for the developed economies is also provided.
Executive Summary. This article summarizes the results of a survey of 150 real estate firms designed to examine how they are attempting to adapt to the Internet and to assess their perceptions regarding its potential. Results indicate a dramatic rise (50%) in the number of firms using the Internet during the second and third quarter of 1999, and that an increasingly significant portion of those firms’ gross sales is attributable to it. The adaptation of the new technology is viewed as an opportunity to attract new buyers and reduce marketing and customer acquisition costs. Respondents report that they expect a substantial increase in business via the Internet by 2002. Thus, firms may be underestimating the potential of the Internet.
Despite ongoing political, economic, and financial uncertainties, the long-term trend of financial market “globalization” continues. This trend has been driven by equity and bond investments, but cross-border real estate investment has increased in recent years. Recent disaffection with stock performance means real estate is at the forefront of many investors' thinking and, increasingly, they are considering real estate as a global asset class. This article seeks to help measure and explain the relative risks of global real estate markets by providing a simple, objective measure of real estate risk based on three components: country, structural real estate, and cyclical real estate risks. Together these measures capture the key dimensions of risk and provide important insights for global real estate strategies. An investor's tolerance for various types of risk varies according to investment strategy. The authors conclude by showing how different combinations of types of risk provide different insights acc...
This article reviews the shift in the 1990s from traditional manual mortgage underwriting to mortgage scoring models and statistical automated underwriting (AU). AU has become the predominant mortgage underwriting method, helping to catalyze a broad wave of technological advancement. Still, further significant changes are likely. Examining statistical AU's history, growth, and underlying factors and concerns, this article especially considers the question of how far AU should be relied upon to evaluate more marginal and higher-risk mortgage applicants (traditionally harder cases). Supporting a cautious, continued expansion of statis- tical AU into higher-risk loans, the article reveals some provocative evidence on statistical scorecards versus traditional underwriters and explores fair lending strengths of AU. Future overall prospects for likely AU and related research areas and developments are summarized.