[freehunter]

Home supply is fixed in some areas, but certainly not in all. Plenty of people around me are buying new houses in brand new subdivisions. When I bought my house, the sellers were moving to a brand new house. If someone hadn't bought their house, they would't have bought a brand new house. My area is growing by thousands of people per year, and the existing houses are already filled. If people want to move in, they have to build more houses.

Meanwhile I buy only used cars, so me purchasing a car doesn't drive the economy any more than buying a used house does.

[rahimnathwani]

Your point about used home sales enabling the sellers to buy new homes applies equally to used cars.

But cars are different from homes:

1) No zoning preventing new cars from being built

2) Cars wear out within a decade or two

[freehunter]

Cars vs houses is actually a pretty interesting comparison. Houses wear out after a decade or two as well, we're just willing to spend more money keeping a house in good working order than we are keeping a car running. If your central air goes out, it could cost you $7000 to fix it. If your car's engine goes out, that repair would cost $4000. But no one throws away their house, they just pay to get a new air conditioner put in. Few people would put a new engine in their car, though.

The average price to replace a roof is $12,000. But again, people are more likely to replace a roof than they are to replace an engine in their car. They'd just scrap it and buy a new car.

Houses wear out just as fast as cars do, but we're more willing to fix our house versus fixing our car. And it's not just a function of cost: you can get a new modular home for $50,000 and it will last decades. The double-wide I grew up in was installed in 1994 and there are still people living there over 20 years later. Very few people keep $50,000 cars for 20 years, though. And I see a lot of people with $5000 used cars parked in front of $150,000 houses. But if they bought a $50,000 brand new manufactured home, they could be parking a BMW out front instead. And if they wanted to, they could throw the house away just as fast as they throw away their car.