For giggles I decided to graph the data that is posted each week on bubble market inventory tracking It sure is a text book case for any Econ 101 class. When supply is tight, the price of real estate goes up (see the narrow band between the two the first several months of 2005). Around mid 2005 supply (inventory) just takes off, and demand (sales) is slowly trending down, which of course leads to even more supply!
The next logical step in the econ lesson is that prices will come down to bring supply and demand back into equilibrium. However home prices are rather sticky coming down since there is a lot of emotion and denial involved.
The next logical step in the econ lesson is that prices will come down to bring supply and demand back into equilibrium. However home prices are rather sticky coming down since there is a lot of emotion and denial involved.
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1 comment:
Great graph. It really says everything it needs to say in handy snapshot.
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