Stated simply, the price of housing is dependent on the number of houses available and the number of people who would like to purchase a home. When the number of vacant houses exceeds the number of potential buyers, the cost of housing is relatively inexpensive. When the number of potential buyers exceeds the number of houses for sale, the price is steep. That, in a nutshell, is the dynamic called “supply and demand.”
Levittowns
As a rule, when the population of an area is expanding, housing is expensive. But there has been at least one remarkable exception. When World War II ended, a real-estate developer named William Levitt understood that a “Baby Boom” created by millions of returning veterans would create a demand for housing. Using assembly-line techniques, he built more than 17,000 homes in Bucks County, Pennsylvania. The houses, with modern electric appliances, sold for $7,900. With the G.I. Bill and federal subsidies, the up-front cost to a WWII veteran was $400. The first of the houses went on sale in March, 1947, and 1,400 houses were purchased during the first three hours.
As the Baby Boom intensified, producing about 79 million births between 1946 and 1964, Levitt stepped up production, introducing his homes to areas adjacent to metropolitan areas around New York City, Philadelphia, and northern New Jersey. And Levitt became known as the “Father of Suburbia.”