this post was submitted on 03 Sep 2023
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But, again, hope is not demand. One must also have the willingness to pay the price. Running away to rent because you are unwilling or unable to pay the price is a clear sign of there not being demand from that segment of the population.
Literally the opposite. A shortage is formally defined as a situation where an external mechanism, such as government intervention, prevents price from rising.
It is a situation where demand exceeds supply, with price not being able to act as a corrective measure. Instead, a good or service will typically be acquired through lottery, first come-first served, etc. instead of going to the highest bidder.
In practice, it is likely you experienced a shortage of toilet paper at the onset of COVID-19. Because of price gouging laws, vendors were unable to raise the price of toilet paper to scare away the poor, and as such everyone was still able to afford it despite there not being enough to go around. It didn't matter how much cash you had in hand, there was no guarantee that you would be able to buy it.
You may have also experienced a doctor shortage. As we require medical doctors to receive the same payment for the same care no matter who the patient is, this prevents you from trying to pay more to secure your spot ahead of the poorer guy next to you. This means that service is provided, typically, on a needs-based basis instead of a price-based basis.
Price rising to correct for excess demand is in no way a shortage. That's a normally functioning market. Calling that a shortage would mean that essentially everything in existence is in shortage, which would make for it to be a rather pointless distinction.
Exactly. We've found equilibrium. The number of homes on the market is quite well matched to the number of actual buyers in the market. There are a lot more people wishing they could buy, yes, but that is absolutely not demand. Hoping and praying is quite different to actually putting money where your mouth is.
Here rent can exceed mortgage monthly price, the high prices mean higher down payment which many cant afford, but housing demand doesnt go down, there are more buyers than units, thus price remains high. Everything else you listed goes against supply and demand theory so I can't have an on going conversation that contravenes known economic theory. Hope you have a good rest of your week.
No doubt. Mortgage costs are but a tiny fraction of the cost of owning a home. If rental costs are anywhere near the mortgage cost you have found yourself one hell of a steal!
You really think that if I show up with a billion dollars, I wouldn't be able to find a home to buy? That's silly. Demand is perfectly satisfied by the supply.
Those who desire, but lack willingness, are not satisfied by the supply, but they don't matter. They're just metaphorical 13 year old boys with a Ferrari poster on the wall, wishing that they could afford to have one. That's not demand, literally. That's just dreaming.
Go on.