A Brief Overview of the Housing Economy

A Brief Economic Overview of the lodging Industry The housing attention has definitely been on the downswing since the summer of 2006. Home sales as well as house prices are down. Inventories of idle base of operationss have increased and there has been a recent declension in the employment levels of the housing industry. Many economists are of the feel that we have not seen the bottom of the decline in the ?Housing Market, which is one of the most important factors of the American economy. upstart statistics indicate that there is an increase in mortgage applications; however, at the same time there is a decrease in permits and new-home startups that could affect the economy for several years to come. In addition, another(prenominal) disturbing trend is the increase in home create cancellations during the last 3 ? 4 months. Elasticity of Supply and Demand about Americans consider housing a necessity. Necessities tend to have nonresilient shoots, whereas luxuries have elastic demands (Mankiw, 2004, p. 90). Due to the slight change in price if the quantity demanded increases or decreases, the price childs play of demand in the home building industry is inelastic. Likewise, the price elasticity of supply in the home building industry is withal inelastic due to the fact that changes in price sole(prenominal) slightly change the quantity supplies.

Substitutes exist in the home building industry. Like automobiles, there are several homes to bring from ranging significantly in price. In an attempt to protect oneself from the elements as well as protect their personal belongings, people mainly invest a significant portion of their earnings by renting or owning a home. Market prices depend on supply and demand, particularly the elasticity of supply (Frantantoni, 2005). When prices for homes increase, if builders would increase the come up of homes built ? hence available for sale ? prices would eventually aim off and possibly fall as the supply surpasses the demand. Externalities in that location are... If you want to get a full essay, order it on our website: Orderessay

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