because they significantly impact housing markets but aren't the primary variables being studied
> Regulation is a constant factor
Wow
"Constant" was misused as a formal term, as admitted. Regulation is still always a varying factor and can't be controlled for. My other points stand.
Regulation is always a factor in the United States. Whether it is a significant or insignificant factor is the question. Regulation is historically in flux, and local, which is why it can't be controlled for. And why would it be, besides?
Perhaps I misapplied the word "constant". What I meant to say is that theoretically there could be a varying formal measurement, but that this is impractical for the reasons stated.
Louder for the people in the back.
If sellers are not in a particular rush to part with a given good, for whatever reason, there is no reason for an over-supply to lead to lower prices. They will simply hold stock until such time as it sells, confident that it will. Does that always pay off? Not necessarily but with housing both in the selling and renting markets, it does so often that I don't think any particular holder of real estate is too worried about it. You can sit on vacant property to your heart's content and somewhere down the line, someone, or some company, will likely meet or exceed what you're looking to get out of it.
Real estate also has the handy benefit in it's basically guaranteed to hold value, and it's unexpected if it doesn't increase in value year over year.
This just says that supply isn't very elastic at that point. It's hardly the only market where supply or demand isn't extremely elastic. Understanding that supply and demand might not be straight lines of unit slope is an econ 101 concept.
> Real estate also has the handy benefit in it's basically guaranteed to hold value, and it's unexpected if it doesn't increase in value year over year.
And the unfortunate cost called property tax which puts a drag on any earnings and compounds losses.
It's an asset class like any other. My house did a real 2x after California's low property taxes over the past 20 years, plus there's my owner's imputed rent which is maybe worth another 0.5x for a total return of 2.5x. It's also had tax deferral on the earnings and the values are a little less volatile than the stock market. OTOH my equities did more like 8x over this time.
There's a lot of economists who think we should have a higher tax rate, but only on the true market value of the land, to promote efficient usage of real property.
This issue is compounded because sellers have to them become buyers. People don't sell their house and then drive themselves into the ocean. For most people a house is where they live. If they sell it they need to buy a new one.
Their motivation for selling is then a function of the house's potential sale value, their new house's cost, and financing rates for them and their potential buyers. If they currently have a very low fixed rate on their house then a new house at a higher rate isn't attractive depending on their current house's potential sale value.
This has the effect of constraining supply and demand.
Well but then there is no oversupply, is there? Like if I have an apple and you want to buy an apple, the supply of apples is zero UNLESS I decide to sell. In the meantime I could have 10 thousand apples and the supply is still zero until I want to sell. Houses that are built and not available for sale are not part of the supply.
I am not a simpleton. I am aware that perfectly elastic supply and demand curves pushing to static equilibrium is not how the world works in practice. But if economics as a study of resources and its markets is going to be a rigorous field, it has to start from some general principles and then explain how paradoxes are consistent in a general framework of limited resources and unlimited wants. Otherwise it's not a serious discipline, just ideologues playing with SPSS on data sources of quality we can only guess at.
If there building more houses does not lead to an easing of prices on houses, then we deserve an explanation and a rigorous confirmation, not speculation.
There is no "law of supply and demand" in the real market, only in textbooks. There is only the factor of supply and demand. Therefore, raw supply and demand is not an assumed default explanation for pricing. No one is obligated to explain why supply doesn't seem to explain price. Though, anyone is welcome to pitch as to why it might for a particular circumstance.
Other variables that are sometimes interlinked: international cash buyers, institutional cash buyers, global dollar and therefore asset and commodity value in USD (inflation), skilled labor costs and availability, interest rates, the white and blue collar unemployment rates, changing lending criteria, the cost of gasoline, regional population fluctuations, the bond market, etc.