Macroeconomics And The Housing Industry

since there is a shortage of houses there is a rush to try and build more and a not much of an incentive to maintain properties. So, the quality of housing will start going down.

What is known about the dearth of inexpensive living spaces in high-cost, heavy populated areas is its scarcity is a function of supply. Demand remains a non-issue for policy makers as demand has

Making yourself aware of the neighborhood and its growth, studying when the market peeks or if it is still growing, and studying the areas general financial foundation of the city, are all important things you need to be aware of when buying a house. According to Mankiw, "In any market, buyers look at the price when determining how much to demand, and sellers look at the price when deciding how much to supply. As a result of the decisions that buyers and sellers make, market prices reflect both the value of a good to society and the cost to society of making the good." This is one of the principles of economics that can quickly affect the profit of this investment.

There are several factors that can influence the housing industry economically. Supply and demand coupled with price elasticity can affect the housing industry. Negative and positive externalities, wage inequality, and the monetary and fiscal policies can all have substantial affect the industry of new homes. It must also be determined exactly how the economy affects the industry in both positive and negative ways.

America’s 2008 recession brought on “falling home prices and tight credit; state- and local-government cuts; higher oil prices that stood in the way of economic growth (“Back from the,” 2012). The price of homes dropped significantly pushing the equilibrium price down resulting in a shortage and an increased demand for houses at lower rates. When this occurs, suppliers are motivated to start producing fewer homes until a new market equilibrium price and quantity are achieved. After America’s recovery in 2009, suppliers slowly began to produce more homes and since that time, house prices have gradually increased (“Back from the,” 2012).

Meanwhile, yearly house price inflation rates in the top 20 cities are running in line with the national trend. The cities with the highest rates of increase are Seattle (+12%), Portland (+10%) and Dallas (+9%). Lower tier property prices appear to be more volatile than their high end counterparts in both Seattle and Portland. Meanwhile, the three cities with the lowest rates of house price inflation are New York (+3%), Washington (+4%) and Cleveland (+5%). Furthermore, rising house prices appear to be having an adverse impact on affordability. According to the National Association of Realtors, rising prices are offsetting higher disposable incomes and stable mortgage rates, and affordability has consequently been declining since January 2015. Partly driving the increase in prices is a lack of available supply of existing single family homes for sale. The number of months’ of unsold inventory was just below 4 in March and availability has been gradually falling since 2014. Additionally, there is a relatively tight supply situation for new single family homes for sale, which is also helping to support prices.

Housing affordability can be defined as the ability to access appropriate housing at tenure or price which is not a significant burden upon household income. (1, 2) Australia has seen a significant decline in housing affordability; average house prices have increased by 147% between 2001 and 2011. This was not matched by increases in income. (1) This decline can be attributed to economic growth, population growth, more accessible finance and incentives for owners and investors. These factors create an incentive to buy and store wealth in housing, resulting in overinvestment and house price inflation. (2, 3) Consequently, this results in depletion of affordable housing for low-income households and increases pressure on social housing stocks. (1, 4) Supply and demand has a significant effect on housing affordability. (1)

After World War I, the demand for rental housing in New York City threatened to drive rents higher. In order to keep rents from rising to their equilibrium levels, city officials imposed rent ceilings. Over time, the implementation of rent ceilings caused a market shortage to occur because the demand for rent controlled units exceeded the supply. According to the law of supply and demand when the price decreases below the equilibrium point there is a move to the right on the demand curve. Conversely, the decrease in price causes a move to the left on the supply curve. Customers demand more of an item, in this case, housing, when the price is lower; however, the suppliers are willing to supply less at the new lower price. This shift in New

Property market is one of the key challenges in the economy of Australia that need to be overcome for economic stability and economic growth. Housing is one of the important sectors of property market because housing provides shelter to us. But the current condition of housing is challenge for us because

Housing demand includes household growth, real incomes, real wealth, tax concessions to both owner-occupied and rental housing, concessions to first homebuyers, returns on alternative investments, cost and availability of finance for housing and the institutional structure affecting housing finance provision (Yates, 2008). The growth in the number of households and in real income results in the increased pressure on housing demand.

Multiple reasons exist for the the lack of affordable housing. On the demand side these include population growth and increased migration to urban areas, easily accessible housing finance, tax incentives and a “strong cultural preference for owner-occupied detached houses”. On the supply side, affordability problems are exacerbated by inflexible and slow responses to the need for new housing stock, lack of infrastructure and generally inefficient planning processes and development assessment by local governments.

In 1999 the market was relatively stable and there were equal amounts of buying and selling of property. However, the market began to improve and the housing market was going up in value. People began listing their homes in the new market in order to make the most profit. The market was in a steady increase from 1999 to 2006. Although, in 2006 the market reached its peak and began to crash. The rapid fall is shown between the time frame of 2006- 2008 and culminates in 2009 when the market crashed. The prices of homes drastically decreased so people no longer wanted to sell but because of bad loans people defaulted on their mortgages and had no choice but facing foreclosure. No one wanted to sell their homes since homes were overpriced and no one wanted to buy because of the problems with the

This is due to the fact that these properties represent a secure shelter for the population, which is considered a basic human need. However the housing market is believed to provide “normal goods”, meaning that as people’s income increases so does their demand for housing (Masron, 2013). Due to the socioeconomic background of a large portion of the population a large segment of the market would be considered a highly differentiated product. Location of the property within London tends to play a large part of the product’s differentiation, as some areas are more desirable than others.

In this report, the question “How much of the changes in the median selling price of homes in a city can be explained by the changes in median income of that city?” is answered. Home ownership is an important aspect of one’s life stages, and home prices are determined by demand and supply. The demand curve is affected by the one’s income, such that as one’s income increases, one is more willing to pay a higher price for the same quantity of goods (Baye & Prince, 2014). However, there are many other factors that might affect the demand curve, e.g. no. of children, in the household, the perceived quality of education in the school district, or the number of job positions (filled or open) around the city. According to Burda

A difficult characteristic to understand about the housing market is how a price is given for a particular house. That price will be designated to that particular house alone. All houses have various pricing, so I can’t always assume that one will cost more or less than any other. The pricing for houses vary based on their characteristics. Each characteristic must be analyzed to determine its contribution or detraction toward the price. I have taken some of these characteristics and modeled the relationship between them and the price of real estate for a specific area.