2006-11-20 05:36:57 · 5 answers · asked by Jim 1 in Social Science ➔ Economics
The home is sold as land with a house on it and the amount of land in a particular location can not be increased. If there is vacant land at the location the number of homes will increase with price like a normal good where the price related to production cost. If the is no vacant land (easy commuting distance of large cities, ocean front, etc) the number of homes can not be increased, or can be only at great expense and difficulty. Then the supply of homes for sale depends on homeowners being willing to sell their home and finding some where else to live. The supply curve can become almost vertical. Because a home is such a large part of budget home buyers are inflexible about the price, but flexible about location and size. When higher income people move into a neighborhood the home prices increases without any improvement is size or quality. The demand curve is strongly dependent on the income of local buyers.
2006-11-20 13:39:19 · answer #1 · answered by meg 7 · 1⤊ 0⤋
The law of supply and demand works like this: If there are lots of homes available (high supply) and not many people are buying them (low demand), the price of houses goes down. But if there aren't many homes available (low supply) and lots of people want to buy them (high demand), the price of houses goes up. There is a point of equilibrium where supply equals demand (meaning there are just enough houses out there for people who want to buy them), but it's very rare that the point of equilibrium is ever reached -- at best you'd either have a few too many houses or you could use a few more.
2006-11-20 05:48:04 · answer #2 · answered by sarge927 7 · 0⤊ 0⤋
Over grant like we've especially parts leads to fee mark downs or close to interrupt down like in Merced, Ca., Los Vegas, Nevada etc. A scarcity will do the different; expenditures will develop through solid call for like the S.F. Bay parts not now yet some years decrease back. also the upward push of the laptop market in San Jose placed rigidity on the markets and housing skyrocketed.
2016-11-29 07:41:22 · answer #3 · answered by ? 4 · 0⤊ 0⤋
The same way it affects all commodities. If demand is great and supply is low (Playstation 3) prices skyrocket, and if something is a glut on the market, people can't give it away.
2006-11-20 06:11:27 · answer #4 · answered by Anonymous · 0⤊ 0⤋
If there are more people wanting to buy homes then there are homes to buy. Means that the price of homes goes up. If there are more homes then there are people wanting to buy homes, then price goes down.
2006-11-20 05:47:37 · answer #5 · answered by Anonymous · 0⤊ 0⤋