News
- 12.10.2010
The housing market does not respond to model supply and demand
the housing market does not fall within the classic paradigm of supply and demand, in which prices rise or fall so quickly to ensure that anyone who wants to sell you find someone willing to buyKrugman's phrase is contained in an interesting article published today by the sun 24 hours, in which he comments on the new Nobel economics prize, awarded this year at Diamond, Mortensen and Pissarides. The three scholars have been awarded the prestigious award of important theories on the labor market
krugman exports the model of the three scholars from the world of work in real estate, ruling that an important element in common: both are composed of heterogeneous actors and it takes time and effort to find the combination cheaper
in practice this is the message: the market price of a house does not exist by itself. There is a seller of the needs and constraints. can be a rich landowner no hurry to sell. can be a family about to have a new son must search for a bigger house in a hurry. can be a worker who lost his job and can no longer cope with the mortgage. while each buyer has its own characteristics
may have a capital to invest. may require a mortgage. maybe you will receive a loan from the bank than what they want
this means that the actors in the housing market are not all equal and everyone has to find "your soul mate." any transaction is a story in itself, which resolves the intersection between a single question and a single bid, in a market, driven mainly by the availability of credit, which directs the individual choices, but not completely determined.