©2011 Cengage Learning

Chapter 9 HOUSING MARKETS ©2011 Cengage Learning

The most important influence on housing demand is population. The Demand For Housing Demographics is the study of population & includes: Total numbers Age Sex Occupation Income level Family composition Other socioeconomic variables ©2011 Cengage Learning

Factors that influence demand Population Income Taste/Lifestyle ©2011 Cengage Learning

Information readily available Population Research Information readily available Forecasts of the next 10 years available by projecting the age composition and adjusting for migration, birth & death rates. Important considerations: Each region has its own demographic breakdown. Migration plays an important role in housing demand. ©2011 Cengage Learning

Income Influences A major influence on housing demand is income. For demand to be effective there must be ability to purchase. Income directly influences type, size, density, amenity level, and quality of housing. ©2011 Cengage Learning

Taste Influences Another major influence on housing demand is taste or lifestyle. Includes: Better standard of living Desire/Expectations Opportunity Cost - other priorities Investment Consideration ©2011 Cengage Learning

One trend has been a continual increase in house size. Consumer taste and lifestyles will change over time with generational differences. One trend has been a continual increase in house size. However, home price increases in various markets could result in smaller houses because of economic necessity. ©2011 Cengage Learning

The Supply of Residential Housing Housing differs from many other economic commodities. A very large percent of the demand is met by the existing stock. Therefore, change in supply is fixed in the short run. ©2011 Cengage Learning

Future Housing Supply will consists of: units currently available. minus those lost as a result of fires, demolition, and conversions to other uses. increased by buildings converted to housing. and by new construction. ©2011 Cengage Learning

Housing Suitability Due to the long life of housing structures, the condition is an important issue. Long-term maintenance is important. Without adequate maintenance, blight will set in. ©2011 Cengage Learning

Housing Demand & Features Housing features are important to the market & include physical features such as space, age, condition, and appointments. More bedrooms allow families to stay together to share resources and reduce costs. Granny units are now offered in some single family subdivisions. ©2011 Cengage Learning

Change Changes in land use demand & development patterns can make certain uses in specific locations obsolete. Long life of housing means that structures must have flexibility to meet the changing needs of a long-term occupant. Older homes must meet demands of new occupants with different income levels. ©2011 Cengage Learning

More Change Filtering process occurs when older houses are acquired because of affordability by lower-income users. Owners sell their house in high appreciation locations and purchase homes farther away costing less. ©2011 Cengage Learning

Real Estate is one of the most regulated commodities Government Housing Programs Zoning Building codes Affordable housing Rent control Regulating housing markets Rent controls ©2011 Cengage Learning

HOUSING Governmental programs either restrict or help market behavior. An overriding concern is the lack of affordability in the housing market. The problem is especially acute in high-population, high-cost areas. ©2011 Cengage Learning