April 10, 2011
Supply and Demand
In economics supply and demand refers to the relationship between the accessibility of a good or service and the need or wish for it amid buyers (Microsoft, 2009). Our daily lives are affected by supply and demand. Demand is based on the price of a product, the price of related products, and customer’s salary and preference. Supply can rest not only on the price available for the product but also on the cost of similar products, the method of how it is made, and the availability and price of contributions. In this specific case I will explain how supply and demand has affected my decision to purchase a home (The Free Dictionary, n.d.). Factors that Could Cause Changes in Supply and Demand
I am the Compliance and Closing Manager for a secondary market mortgage company. Over the past thirteen years I have worked in every area of mortgage lending, through the good and bad times. I have seen the effects that cause the changes in supply and demand when purchasing a home. One factor that can affect supply and demand when purchasing a home are is interest rates. Higher interest rates can lead to less people making the decision to purchase a home because of high mortgage payments. The effect of higher interest rates can cause the supply to increase as homes sit on the market longer. When a home sits on the market for a prolonged period of time, the price can be affected. If the supply is high and the demand is low, for one home to be sold over another, price is also a factor that can increase demand. Homes with lower sales prices affect affordability. The lower priced a home is, the more reasonable it is to a would-be buyer. Another factor that can affect supply and demand is condition of the home. A home in poor condition is not usually in high demand, but for an investor looking to rehab a home condition may not be a factor. Substitutes for Buying a Home
There are several options or...