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Economics Of Homebuilding

 

            
             Economics is the study of how people use scarce resources to satisfy their unlimited wants.2)MHI Homebuilders is a company that builds houses in the metropolitan areas of Texas. There are several issues that effect the company, which relates to economics. There are interest rates, price of materials and labor and lastly the demand of the product. One of the current dilemmas the company is facing is how to stay competitive with the competition, during the current recession and economic downturn. Even though the homebuilding industry is doing fairly well, there is still room for gaining market share and improving customer service and satisfaction. The economics changes in the lending rates of banks and the mortgage rates of the consumers play a vital role in our ability to receive money to build and the consumer ability to purchase a home by gaining a mortgage.
             There are several other builders trying to build the same types of homes in the same area of Texas. Most of these homes are being built cheaper and more efficient than MHI "s homes. Our product is relatively more expensive than some of our competition because we use more expensive, and a better grade of supplies and building materials .We also offer custom building and give the buyer complete choice in all aspects of the finished product through options. The buyer has multiple selections from the floor to the ceiling. It is not a "recipe" or and manufactured type of home, but because of the choices available, the consumer has to purchase 50% of the options to start the interior of the house. .
             The opportunity cost, which is defined as "The value of the best alternative forgone when an item or activity is chosen, " in the homebuilding industry is the price of credit. One of the main choices, the company has to make is the ability for receive the best value from our investments by shopping for the best lending rates with the banks.


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