The Building Industry And The Economy
The Building Industry and the Economy
There are many levels to the building industry. Some of these categories include transportation and buying of the materials, construction of the housing, and the buying or financing of the house. The one thing that all these levels have in common is the economy. The economy, whether it is foreign or domestic, affects the building industry. This paper will research the effects of price elasticity of supply and demand, negative or positive externalities, wage inequality, monetary and/or fiscal policies, and influences that can affect the industry in a negative way. The building industry is ever-changing due to the ever-changing economy.
Principles of Economics (text book by Gregory Mankiw) states that quantity demand is that amount of goods consumers are willing or able to purchase (Mankiw, 2004). Demand can be influenced by the amount of supply that is available, substitutes that are available, and most important the price of the goods or services (Mankiw, 2004). The demand in the building industry is affected by many things, foremost the costs of materials. From an article written by Michelle Mowad the overall costs of commercial construction is up 15 percent while lodging construction is up by 60 percent in the San Diego County area. This is directly affected by the rising costs of materials. Mowad writes that drywall alone has increased in price by 23 percent in 2007. She goes on to write that these costs of building materials ultimately get passed down to the consumers (Mowad, 2007). This article proves that the building industry is elastic in its supply and demand. Not only have construction companies seen a slump in business due to the costs of materials but also the retail stores such as Home Depot or Lowe’s. In an interview with Paul Larson, he says, “Demand for home improvement goods and services are closely tied to residential construction trends and real estate market conditions.
So it’s...
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