Home > Microeconomics > Mobile Homes and Demand Shifts

Mobile Homes and Demand Shifts

This article on the decline of the manufactured homes industry in the U.S. identifies one after another textbook reasons for shifts in demand:

Five broad factors account for the mobile home industry’s long slide. First, the housing bubble’s loose credit encouraged low-income families to buy regular “site built” homes instead of mobile homes. Second, the recession hit low-income folks who comprise most of the mobile home market harder than average. Third, the housing bubble’s collapse killed the price of houses and condos, making them a better deal for low-income families (especially since manufactured homes depreciate in value, while a house’s value increases over time). Fourth, older couples who would normally sell their house to buy a mobile home are waiting for the value of their houses to rebound.

As I count ’em, that’s reduced price of a substitute, reduced income, reduced price of (another) substitute, and expectations. Nice classroom example.

Advertisements
Categories: Microeconomics
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: