Economics of Household

Economics of Household

Introduction

Recently I purchased a new home, and as people will tell you, it is one of the more complicated purchasing decisions as there are many factors that are needed to be taken into the consideration. The overall performance of the housing sector defines the economic prospects of a certain nation.

Demand and Supply of Household

The demand and supply of the housing market is pretty unique and it is taken as one of the talking points of the economy. When one looks at the demand and supply of the household sector, it can be seen that affordability is one of the key factor as far as demand of the households is concerned (Evans, 2008). The affordability in turn depends upon the overall income level of the people in the economy. Consumer confidence is also one of the key factors that affect the demands of the households, and interest rate that is prevailing in the economy also affects the demand of the households. These are only some of the factors though as far as demand is concerned.

When one looks at the supply side of the household market, the number of the new houses that are constructed is one of the key factors as far as supply of the households is concerned (Yang et al, 2003). Similarly, the overall profitability that household suppliers enjoy may also influence the supply of households. During the times of economic prosperity, there will be more demand for the housing as people will be more inclined towards the accumulation of assets and wealth.

Substitutes for Houses

There are unfortunately not many substitutes for households as it is one of the biggest necessities, but there are some distant substitutes for households. The first substitute of housing and permanent residency is that of Boarding and Lodging. ...