January 21, 2014
Dr. Bryan Aguiar
Many Individuals believe in the American dream of home ownership, freedom, and to make wise and healthy choices for all our families and also for our future generations. The wants and our means to fulfill those wants in our lives control our educations degree, employment status, motivations, and how far you are just willing to go complete this circle of needs. In recent years there has been astounding news about the cost of new homes falling rapidly. Numerous financial advisors and economist are trying to find a solution through models and graphs. In the pages below, I will address some issues with scarcity with the fallen sales of new home, marginal benefits/cost and connect that analysis with opportunity cost.
Most individuals in America desire a home or a place to build their future generations, provide a safety atmosphere for their families, and have big lofty corporate parties in their back yard, or just established peace in a quiet neighborhood with friendly neighbors. Seems like a dream but in reality, busy individuals are willing to pay such a high price for such a lavish life, they are working longer hours, compromising family with work, some even work for unpleasant managers just to fulfill the position of employment, and even work these factors for the great credit score to achieve the wants in life. The scarcities in new homes that are falling in prices have numerous factors.
First time home buyers has shrunk because of bad credit scores (Dewan, S. (2013).
Tougher standard on home mortgages that have kept potential buyers out of the market (Dewan, S. 2013).
Committing to a 30-year or a 15-year mortgage at a fixed rate or adjustable rate (Ergungor, E., Zaman, S. 2011).
Allege tax advances
Homebuilders cannot keep up with the demands of what the market needs because of weather impactions, constructions restraints on permits, tight labor and shortages on building sites, and not finding enough workers to complete the job (Brown, S. 2014).
Homes were sold at a median price of 220,000 in July, so depending on the full price; consumers will not pay much at all (Hauser, C. 2011, August 24).
According to Hauser, C. “In addition, demand for new homes is stagnant despite record low mortgage interest rates, and competition from foreclosures continues to cloud the sector” Hauser, C. (2011, August 24)
So in all scarcity, brand new homes have a potential advantage of being sold or even rented out to hard working individuals who also have the same dream. Home buyers are scarce, so renters are taking their place to fulfill the homes so that the home market balances out.
Colander (2010) stated, “Marginal cost is the additional cost to home buyers and also the cost that you have already incurred” (p. 7). So according to Colander, the marginal cost in this article would be the homes that are already built would sell in the housing market, and if it does than the marginal benefits would be the additional benefits above what I already derived. The marginal benefit of buying a new home is the added increase each of the family receives from the added purchase of profit such as hardwood flooring which will bring up the cost in profit, maintaining a large yard and installing a home security monitoring system. There are numerous factors that can be added to the benefits such as