Housing Market Economics

Since the great recession, the real estate market collapsed and there have been problems in the housing market. People were starting to roommate with others or rent apartments. Almost everyone wants their dream home but can they really afford it? The focus of this economic analysis paper is to apply supply and demand for the housing market. Due to the problems in the housing market, there has been a shortage of skilled construction workers. “New home construction fell by 11%, resulting in a supply problem in labor and land.” (Chris Matthews). “The number of homes listing in January fell by 2.2 percent, which means buyers looking for a new home doesn’t have a lot of options.” Due to the lack of supply, the prices continue to rise. “The average sale price for a nicely built home today is over $200,000.” (Diana Olick). “If the houses attract the consumer, they are likely to pay the high prices.” (Tony Guerra). “The location of where the house is built can play a role in supply and demand as well. Just because a house is newly built, doesn’t mean the house will actually sell.” (Tony Guerra). …show more content…
Even in the lower price range homes, first-time buyers have trouble finding a home. Inventory fell in 19 of the largest cities in the U.S. “If the supply of housing increase, then the prices will begin to reduce.” (Diana Olick) This will cause an increase in demand for the housing market. Other factors play a role in why the demand for housing has decreased. “Homeowners have negative home equity which means they are paying more on their mortgages than what the house is actually worth.” (Diana