Supply and Demand of Housing

Length: 227 words

Much of the analysis of housing demand and supply can be subsumed under real-estate economics. The housing market determines the equilibrium supply and demand for using. In recent years, the demand for housing in the United States declined by about 7%. The general cause is up to this day, undetermined; however, it is widely accepted by economists that the decline was due to decrease in alienable land available to population centers. The main determinants of the demand for housing are demographic in nature.

Some of the important demographic variables are as follows: 1) population growth, 2) population density, 3) male to female ratio (sex ratio), 4) educational attainment, 5) class, and 6) mortality rates. Other non-demographic variables like income, cost and availability of credit, consumer preferences, prices of substitutes and complements, and the general price of housing also play important roles in assessing the demand for housing. The general dependent variable, in this case, is the available housing units provided by the market.

The supply for housing is determined by variables like land, labor, and other inputs. The cost of the above-mentioned inputs, the stock price of housing units, and the level of technology generally determine the quantity of housing units that real-estate firms supply to the market. The pubic sector is also active in dispensing housing units to private individuals. Government expenses for real-estate development are however, greater by 3% compared to real-estate firms.

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