The Impact Of Depressed Economy On Real Estate Finance
This study is on the impact of depressed economy on real estate finance. The total population for the study is 200 staff of selected estates in Osogbo, Osun state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, security men and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
1.1 Background of the Study
In the minds of most people “financing” as its name implies conjure up visions of inexplicable exchanging of piece of paper which involves something called “interest” that take place generally anywhere. Those who trail their interest in finance swiftly find out that you don’t have to go that level before getting involved in a financial transaction. The major brokerage houses have branches in most communities. Furthermore there are usually commercial banks and savings institutions as well as microfinance banks and many communities, regardless of their various sizes. Infact, financial transaction can take place almost anywhere there is no need to go to a commercial bank. All you need is two or more populace. Chika E Udechwuku (2008) says real estate financing is the process of acquiring funds or capital generally for the purpose of development in order to gain control over the property or assets there are two ways of classifying estate finance which tend to overlap themselves
- Whether the financing is internal or external to the real estate owners or developer.
- The above two depend on the third which is the duration of estate in question.
Sherman J. Maise (1987) also says real estate finance is concerned mainly with the decisions by which many resources are raised for the purpose of owing or developing real estate. Although all decision could be sometimes are made by a single person two or three separate are usually active in a financing transaction. In addition most of the cash is borrowed from financial institution such as Mortgage Banks. Moreover financing of real estate or real estate finance involves evaluating the situation adjourning the transaction and deeding the best method of financing of real estate given the risk and certainty of situation. Given many ways in which financing can be structured professionals must understand how the alternative differs in their ability to increase potential gains and raise or lower the risk of failure. New pressures have altered traditional mortgage lending in years back, most mortgage money came from local lenders. Every loan was treated differently, and once made loans were held until the debt was paid off. Today mortgage are traded in national market. In 1987 Sherman J. Maise also stated that:
- A users of capital developers and owners of real Estate must obtain financings in order to build own operate properties. Very different financial analysis i.e. behind decisions made by the largest group of users, those who wish to own home compare top the decisions made in buying income properties or land.
- Funds are supplied by a variety of individuals firms institutions and government. Some of these institutions will be discussed. Government and their agencies have become increasingly important sources of funds as have foreign investors. However the importance of serious groups has been growing mortgage and real estate brokers helps to locate funds and advice users about the best sources of funds.
1.2 Statement of the Problem
Financing of real estate has a lot challenges faced by particular investors in Real Estate finance whether it is a home owner seeking a loan, someone planning to sell or invest in real property an employee of a financial institution active in lending and building a mortgage portfolio, or a mortgage or investment banker developing new ways to raise money on securities require certain basic knowledge to function well. In line with this, this project will see to what determine interest rate level, who lends on mortgage and how can home buyers obtain affordable financing even when the economy is depressed.
1.3 Objective of the Study
The objectives of the study are;
- To examine the impact of depressed economy on real estate financing.
- To observe how finance can be acquired and the variety of financing that is appropriate to real estate development.
- To examine the tool used in financing of real estate and steps to take to sourcing for real estate finance.
1.4 Research Hypotheses
- H0: there is no impact of depressed economy on real estate financing
- H1: there is impact of depressed economy on real estate financing
- H0: there is no tool used in financing of real estate and steps to take to sourcing for real estate finance.
- H1: there is tool used in financing of real estate and steps to take to sourcing for real estate finance.
1.5 Significance of the Study
Financing real estate especially in a depressed economy is a big task to individual investor, government and cooperate bodies. It is however important to carry out a study on this topic in order to ameliorate the fear being exercised by real estate investors during the period when economy is depressed. The study will equally bring out various issues and problems that may be encountered in financing real estate in a depressed economy hence one may need to prepare and take precautions for such entities. In addition various sources of financing real estate shall be made known to people in the course of the study
1.6 Scope and Limitation of the Study
The study will see to financing of real estate with particular references to Osun state. In carrying out this study there is need to investigate some various theories of financing and how these have an effect on the efficiency of real estate. This study also covers the activities of government on housing finance. This dissertation limited itself to those what being found in Osogbo. The researcher encounters some constrain which limited the scope of the study;
a) Availability of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
1.7 Definition of Terms
In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Real estate is “property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this an item of real property, buildings or housing in general
1.8 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
- Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to ascertain the impact of depressed economy on real estate finance
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of depressed economy on real estate finance
This study was on the impact of depressed economy on real estate finance. Three objectives were raised which included: To examine the impact of depressed economy on real estate financing, to observe how finance can be acquired and the variety of financing that is appropriate to real estate development, to examine the tool used in financing of real estate and steps to take to sourcing for real estate finance. The total population for the study is 200 staff of selected estates in Osogbo, Osun state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, security men and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
This research study concludes that real estate investment if explore it will create reliable return to the investment owners, the benefits that can be derived from real estate investment has been revealed by this study. This study has shown that government policy should be enacted to create more viability to the business. The study also postulated that economy of a nation can be enhanced if property markets are well coordinated. It also concluded that building materials should be manufactured locally so that the cost would be minimized. The study also highlighted that private developers are key important for real estate investment in Nigeria. The conclusion drawn by this research shows that real estate investment has a capacity of transforming economic hardship in the country.
An unmaintained property portfolio causes management problems for the Property Manager. Nigerian Institution of Estate Surveyors and Valuers should be engaged on massive enlightenment programmes to educate property owners on the need to make provisions for maintenance services. The Institution should also sponsor a bill restricting the operation of quacks because most of the property owners in the study area cannot differentiate a professional Property Manager from a quack
The Impact Of Depressed Economy On Real Estate Finance
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The Impact Of Depressed Economy On Real Estate Finance
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