Housing Market

Housing Market

  • Submitted By: mannix
  • Date Submitted: 09/19/2009 11:23 AM
  • Category: Business
  • Words: 2244
  • Page: 9
  • Views: 8

Housing Industry 1

Housing Industry

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Housing Industry 2

As with most industries, the housing industry include the sectors of , home building, mortgages,

cost of housing, and government intervention, but for the most part, dependant on the current

strength of the economy. Shifts in price elasticity of supply and demand are key factors. By

getting an overview of how builders have taken a direct hit, an analogy can be established for

the supply and demand of housing, and how the housing bubble, triggered by excessive sub-

prime mortgages, affected the collapse of the housing industry.

The “American Dream,” of homeownership has been vastly fueled by politicians, and

government has subsidized this dream for decades. According to Business Journal, “The

fundamental issue, at least from an economic perspective, is whether it is a good idea for

government to distort the allocation of labor and capital,” the article goes on to elaborates the

fact that policies that encourage over-investment and how these policies contributed to the

market meltdown. Once demand for housing hits a wall, supply takes a direct hit. The housing

market has seen many builders closing businesses do to profit losses and dwindling business.

The Housing Industry lost revenues from the sectors of real estate, particularly mortgages

and new home construction. With banking and lending institutions closing the doors on credit,

construction came to a halt. Many home builders folded, others downsized, and still others went

into bankruptcy. Most businesses, without the financial support, lack the funds to generate cash

flow, could not finish subdivisions. Professional Builder, in their annual report of the top 400

home builders, shows that 350builders made the list for 2009; it is based on total revenue and

total completions. Out of the total...

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