Needs, patterns, as well as trends in the housing consumption in a changing and contemporary society, has been a significant concern of professionals in recent years. Housing consumption encompasses diversity of issues that are influenced by different consumers in the market, especially those who seek to provide consumable and shelter services for their households as well as themselves. The consumption of houses is influenced by affordability, appropriateness, level of income, as well as the availability of the housing stock. In the private market, housing consumption is the ultimate outcome of housing expressed demands and is controlled by the demand and supply theory. Housing demand is responsive to the price of housing, distributions as well as levels of consumer income, tastes, and preferences, household composition, amount of other goods, as well as demographic influences. This paper, therefore, discusses the consumer and the housing stock demands and supplies, housing consumption decisions, as well as diversity and discrimination.
Supply and demand influence the consumption of housing as it relies heavily on them. Every housing transaction constitutes a seller and a buyer. A low supply causes a direct increase in prices. On the same note, an increase in demand increases the prices of housing (Piazzesi 532). On the other hand, an oversupply and or a weak economy lead to low housing demand, which in turn lower their prices. Borrowing costs or interest rates are some of the factors that influence the demand for housing. People are more likely to take more debts when the interest rates are low. As a result, they are able to finance the purchase of houses as the amount they have to pay as interests are not burdensome. If the number of buyers increases, demand increases. On the same note, if the supply of housing inventory is limited, people from a low-interest environment tend to buy even more.
When the housing supply is constant, the suppliers may increase the inventory. Similarly, consumers may expand rooms to incorporate their family or buy more. As a result, the construction of new home and increase in development, adding to the already existing (Piazzesi 532). Contrary, during the time of disasters such as earthquakes and floods, or when there is demolishing of the existing properties, the housing inventory decreases. Therefore, demand and supply affect the consumption of housing. Besides, the confidence of the consumers increases the demand for houses. The housing consumption and market, as well as the future of the economy in housing, depending on the people’s confidence. For example, the demand for houses is more likely to rise faster in a booming market. Moreover, the consumption of housing is affected by affordability. In income levels keep increasing, people are able to afford more housing. On the other hand, during rapid economic growth, the consumption of houses increases with the rising demand.
In conclusion, housing consumption encompasses diversity of issues that are influenced by different consumers. The consumption of houses is influenced by affordability, demand, and supply, level of income, as well as the availability of the housing stock. A low supply causes a direct increase in prices while an increase in demand increases the prices of housing. The consumption of housing is also affected by affordability.
Piazzesi, Monika, Martin Schneider, and Selale Tuzel. “Housing, consumption and asset pricing.” Journal of Financial Economics 83.3 (2007): 531-569.