Housing and the law of supply and demand
Posted in social science on March 28th, 2007
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I’m cautious about the housing market, but I enjoy reading bearish analysis to keep some perspective. Mike Shedlock asks five questions everyone should consider as they contemplate the housing market place:
Understanding Demand - 3 Questions
- Who wants a house that does not have one?
- Who wants a house that can afford one?
- Who does not have a house and is willing to pay substantially more than rental prices for one?
Understanding Supply - 2 Questions
- How many have a house they can not afford?
- How many have a house they soon will not be able to afford?
About a year ago I prognosticated that things were getting dicey for housing. As we enter into a price correction those who must sell due to job changes and other circumstances will be bear most of the cost, but to keep this in perspective most people will continue to do what they have done for years: live in their homes. A price correction in any market is paid for by those who panic or sell low.