When will a company take advantage of the "poor" market?

[HappyHarley]

Originally Posted by le roi

these things are expensive because our (A) tax code subsidizes debt, and (B) we've had loose monetary policy for about 30 years

houses get bigger, cars get safer ... as you mentioned, that has an impact, too.

I definitely do not agree that houses are getting bigger. Maybe for the .5%. Houses are generally getting smaller and the lots are definitely decreasing in size. From the looks of most new developments I've seen, the houses are so close to each other that you could literally jump from one roof onto the next if the roofs were flat. Also the construction materials they are using now a days are so cheap. In almost all new houses/businesses I've been in the walls are super thin which is really a negative for people living with non-family members and even other family members.

[le roi]

Originally Posted by HappyHarley

I definitely do not agree that houses are getting bigger.

well, you're wrong.

http://www.census.gov/const/C25Ann/s...medavgsqft.pdf

Maybe for the .5%. Houses are generally getting smaller and the lots are definitely decreasing in size. From the looks of most new developments I've seen, the houses are so close to each other that you could literally jump from one roof onto the next if the roofs were flat.

you have to expand your view of the economy beyond what you can personally observe.

[hnsq]

Originally Posted by HappyHarley

I definitely do not agree that houses are getting bigger. Maybe for the .5%. Houses are generally getting smaller and the lots are definitely decreasing in size. From the looks of most new developments I've seen, the houses are so close to each other that you could literally jump from one roof onto the next if the roofs were flat. Also the construction materials they are using now a days are so cheap. In almost all new houses/businesses I've been in the walls are super thin which is really a negative for people living with non-family members and even other family members.

The amount of spending on entertainment by the middle class has tripled since 1960, the square footage of a home has increased by over 250%, and the number of cars owned by a middle class family has increased by 80% over the last 60 years.

According to the 2007 US census data,

"In the 1950’s housing only accounted for a little over 20 percent of what the average American family spends. Today, a little over 40 percent of the average American family’s income goes towards housing. The reason for the 20 percent jump is the fact that the average family household size has doubled since what was considered to be average in the 1950’s. The houses of today have more bathrooms, bedrooms, and closets. Furthermore, the individual rooms in the houses of today are also a great deal larger in size."



So housing costs have increased as a % of income (due to the reasons above), all other essential goods categories have statically speaking declined in spending.





The middle class spends more today on luxuries (bigger houses, more entertainment) than ever before in history. The middle class would not be suffering if they maintained a consistent standard of living and actually invested more. Despite this higher standard of living, savings rates among the middle class has not increased whatsoever.

[Egbert]

Originally Posted by HappyHarley

Also, what about the poor housing market? Why are we allowing local governments to regulate that an apartment or house must be a certain square footage minimum?

Why haven't apartments been created that are much like a dormitory or hotel room? Like only 250-350 square feet? Have just 1 bigger room and 1 small bathroom in each. And then just have like 2 community kitchens per floor?

The same reason there are privately made restrictive covenants or equitable sevitudes that limit building type and design. Mostly because folks don't want the poor or rentals moving in to their neighborhood/community and the resulting depressed home values/atmosphere and those folks will often have some pull in the state legislature when it comes to their local government issues.

[renault]

Nike. Walmart. McDonald's.

There are dozens of companies who market specifically to the poor and working class, but they don't call them poor or working class, they call them their target audience.

[jackmccullough]

I haven't read the entire thread, but there are plenty of businesses that exploit low-income people. It's not car manufacturers because the manufacturing costs are too high to be able to produce sufficient margins on a vehicle that poor people can afford. In addition, they already manage to sell to fairly low-income people in their leasing practices.

The reason I say "exploit" is because the businesses that cater to this segment of the market tend to be pretty shady and to sell products at exploitatively high rates for what their customers are getting. These businesses include:

1. The rent-to-own industry.
2. Payday lenders.
3. H&R Block and other companies that sell refund anticipation loans (are they still legal?).
4. Landlords who rent mainly poorly maintained substandard housing.


There are also the dollar store chains and low-rent mail order firms, like Fingerhut.

What these businesses have in common, in addition to locating in lower income neighborhoods and trading mainly with relatively unsophisticated customers with few options, is that they don't have anywhere near the capital costs of a car manufacturer.