Tuesday, February 5, 2008

Housing Markets - 2

Some of the factors are age of the house, square footage, total number of rooms, number of bedrooms, number of bathrooms, specialty rooms, hardwood floors or not, fireplace or not, number of garages and whether attached, deck or porch or not, fenced or not, style of the house (colonial, tudor, etc.), lot size, nearby amenities such as a park or lake, exact address (which also acts as a proxy for local public good services, such as quality of the neighborhood schools), and date of the listing.

Note that most buyers of homes are also sellers of homes. When a family moves into a new home, it moves out of the old home (unless this is a first time home purchase or a purchase of a vacation home). Thus many of the factors which influence demand for homes also influence supply. Some of these include one or more of the breadwinners in the family getting a new job and needing to relocate, a significant change in wealth (for example a major promotion, a loss of a job, or an inheritance) that makes alternative housing more desirable, and change in the number or health status of family members that makes the current house unsuitable.

For these reasons, and some other reasons too, buyers of homes, even those interested in purchasing the same house, are different from each other in some relevant respects. In other words, a seller might prefer to deal with one buyer over another. It is not just the properties that are differentiated. It is the people too. Can you think of some other factors that might differentiate the buyers?

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