Premium
The Affordability of New Homes
Author(s) -
Weicher John C.
Publication year - 1977
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00827
Subject(s) - inflation (cosmology) , subsidy , economics , public economics , labour economics , market economy , theoretical physics , physics
There has been much recent public discussion about the rising price of new homes, and concern that an increasing number of families are priced out of the new home market. This paper argues that new homes are no more expensive, relative to income, than they have historically been, although the large volume of subsidized new home production during the early 1970s has tended to distort the recent trends. The main problem for new home buyers is the increase in mortgage interest rates generated by inflation in the past decade. However, current homeowners have also benefited from inflation and may be better able to afford a new house as a result. This paper also presents data on recent new home buyers, showing that a large number of families are buying new homes supposedly beyond their means, and that the typical buyer has a much lower income than has been thought feasible by many housing market analysts.