Last year, house prices in my zip code increased by about 10%; and they are forecast to increase another 10% this year. This "tightness" or "seller's market" is indicated by the small available supply relative to demand, as indicated by the 2.1 months of inventory. [NOTE: months of inventory=(# houses for sale)/(selling rate per month)]. In the scatter plot below, we see that an inventory of 2.1 months (vertical axis) is normally associated with about a 1.5% monthly price increase (horizontal axis). The increase in housing demand caused by the lockdowns, as working from home increases demand for bigger living spaces, or for owning a bigger home instead of renting a smaller apartment, is probably behind the price appreciation. And if you can explain a price change with demand and
(Luke Froeb) considers the following as important: 08: Understanding Market and Industry Changes, 09. Long-run equilibrium
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