Re:Supply Constraints Do Not Explain House Price, Quantity G...
by bluGill on Wednesday March 19, 2025 @05:33PM
(#43417544)
The market also depends on your wants. One house is not always equivalent to another. Location matters of course. However layout, color and other features matters (some of them are trivial to change some not).
Adam Smith observed that when people got more money they tended to spend it on better housing. That observation is mostly true today.
Re:Supply Constraints Do Not Explain House Price, Quantity G...
by Retric on Wednesday March 19, 2025 @06:47PM
(#43418053)
People do get better housing, but the share of income spent on housing drops as wealth/incomes rise at the individual level.
There’s just diminishing returns on the value of spending more on housing vs other things like going on interesting vacations.
So the underlying explanation is likely that your personal salary has basically zero impact on the housing market, once you make enough to cover rent you end up paying the market rate. What matters in terms of short term trends is the marginal increase or decrease in people’s willingness to have roommates, live with their parents, etc.
When times are good and more people are gainfully employed the demand suddenly shoots up, in a downturn people suddenly move in with others become homeless etc. By comparison adding 2% housing units just doesn’t have nearly the impact it seems like it should.