|Home, Expensive Home|
|Topic||Supply and Demand
|Key Words||Cost, consumers, unemployment, stock market, interest rates, booms, recessions, price, labor, supply|
The average American home now costs in excess of $200,000, up 17 percent over a year ago. Part of the reason is that homes are getting bigger. People want more amenities such as bedrooms and bathrooms, and trimmings such as trophy kitchens, pillared driveway entrances, and recesses for statues. Consumers are able to pay for the houses because of low unemployment, stock market gains, and relatively low interest rates. This is not unusual¾house sizes generally increase during booms and contract in recessions. Another factor is that house buyers wish to have space in order to escape the pressures of city life. Better-insulated walls and tighter windows now make heating and cooling larger spaces more economical.
The other reason for the increase in price is that land, building materials and labor are more expensive. Cabinets are increasingly made out of relatively costly maple, rather than cheaper oak. Skilled labor is in short supply, but costs are reduced by making walls and ceilings in the factory and assembling them on the construction site. Facilitating the increase in the size of houses, stronger trusses are now available, alleviating the need to use walls as supports.
(Updated March 1, 2000)
|Source||Carlos Tejada and Patrick Barta, "Hey, Baby Boomers Need Their Space, OK? Look at All Their Stuff," The New York Times, January 7, 2000.|
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