Week 4: CheckPoint - Industry Research Part II

Grade: 30/30
This had multiple parts which are all combined below.
Article or Web site reference:
Hogsett, D. (2005, May, 2).  Housing Numbers Stay Strong.  Retrieved on September 30, 2005, from Ebscohost database

Summary of Article or Web site:

The market for new home building continues to grow at a record setting pace.  Although the weather has impacted the new home starts, the article predicts that this situation will rectify itself, and that new homes will continue through 2005 to sell rapidly.  Used homes are selling quickly, and a backlog of inventory has not been an issue.  The author is quick to point out that this is unexpected growth because home prices have escalated a great deal.  Certainly low interest rates are impacting the growth of the housing market as a whole.
Article or Web site reference:
Sichelman, L. (2002, October 28).  Study Justifies High Home Prices.  Retrieved on September 30, 2005, from Ebscohost database.


Summary of Article or Web site:

This article discusses the importance that land values are placing in the ever rising cost of home ownership.  Metropolitan areas as whole have seen some growth in land prices because of both man made and natural constraints on building.   The article discusses a new measurement tool called the “Gross Metropolitan Product”, GPM, which is a shorthand measurement that determines supply and demand in a given market. 
The housing market, in particular the new housing market, is full of negative externalities.  Homes require the use of land, which the government must regulate so that homes are not built in areas that impact the environment severely, or are a danger to the people who own the homes due to the area in which they are built.  

Older homes, which can be of lesser value because of the need to repair them, can be a much harder sell.  Local governments can provide special subsidies and monetary advantages for having bought a historical home which offset these potential disadvantages.  The community benefits by having these homes maintained, as well as they add a sense of history to a neighborhood, which is a positive externality.

The housing market is both rival and excludable.  It is rival in that one can be prevented from utilization by not having proper funding or because it is outside of one’s budget.  It is excludable, because if one person purchases the house, the no one else can have the home until the person choices to sell it.    


© Erik Smith 2005
Licensed under the GNU Free Documentation License