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Housing Industry - Economics

nning head: Economic Profile of the Housing Industry
Economic Profile of the Housing Industry
Lissette Rodriguez
Axia College
When the economy fails, it impacts all industries, despite what it is. The US economy plays a major role in every single industry. During favorable economic times the demand is high. We all just have seen how the prices of our homes rose to an all time high. This was during the housing bubble. Then after the bubble burst we have been witnessing the largest decrease in the housing industry of all time. As we witnessed, the high demand times could potentially result in the production of goods. In little time the supply is then outweighed and it leaves a higher volume of inventory once the shifts in the economy occur. Boom or bust, the housing market is influenced by the overall state of the economy. Throughout this paper, the economic profile of the housing industry will be researched and how the supply and demand shift the price and the elasticity of the pricing, some positive and negative externalities, wage inequality, and the monetary and fiscal policies.
The inception of homebuilding was begun when individuals became educated and skilled in building hardened shelters. The necessity for a hardened shelter was to provide comfort, protection, and privacy for themselves and/or for their families. Shortly after, housing became a necessity for every single individual, just like food, water, and health. Shortly after the first profitable home was constructed, it was not forecasted that the capability to put together a home would be so intricately united to the economy. Due to the fact that homes are a necessity, the price elasticity of demand for the home building industry is currently inelastic.
The price elasticity of demand for the home market is said to be elastic. Although there are many psychological factors that contribute to its elasticity, homes are still considered to be a valuable asset. A substitute to owning a home...