The Housing Market Impacted By September 11, 2001
The terrorist attacks of September 11, 2001 had severe ramifications for the U.S. economy. After 9/11, consumers feared future terrorist attacks would occur. As a result of declining consumer confidence, the Federal Reserve made interest rates more appealing with the hopes that consumers would take advantage of lower cost by increasing their consumption of durables. Due to 9/11 there was a decrease in the sales of homes and household goods. This paper measures the impact of 9/11 on the housing market. It describes its performance under the pressures of 9/11, and also addresses how home sales performance impacted Gross Domestic Product, and employment levels. My hypothesis is that September 11, 2001 terrorist attacks had a negative impact on the housing market. I believe this to be true despite relatively low interest rates. My hypothesis is based upon the proposition that consumer confidence is ultimately the factor that determines the status of the housing market and the economy as a whole. If consumers do not have confidence in the economy, then they will not consume with the same purchasing capacity if they had confidence. This idea of consumer confidence inevitably explains why after 9/11, the sale of homes declined even with low interest rates. Ultimately, the goal will be to show that 9/11 had a significant impact on the U.S. housing market.
School:
University of Illinois at Urbana-Champaign
Department:
Liberal Arts & Sciences
Research Advisor:
Paul Magelli
Department of Research Advisor:
Economics
Year of Publication:
2004