Respectfully, why would data be controlled for "regulatory limits" and "economic stagnation"? Regulation is a constant factor, historically, not something that would be controlled for. You could have something like a "regulatory constant" but then you would need one, historically, to make it meaningful. It would also likely have to be local. None of that will exist. How exactly do you define "economic stagnation" and how would one control for it, assuming for one second that would be desirable to do so?
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.
That's like saying "there are no perfect spheres in the real world, ergo Newton's Laws are bunk."
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.
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.
> There is no "law of supply and demand" in the real market, only in textbooks.
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.
> 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.
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.
In Ireland as well as property tax we also have a dereliction charge for sites/properties, it's been on the books since 1990, but recently being leveraged (clumsily) to punish land hoarding in urban areas. It's currently 7% p.a. of what somebody declares the market value of the land is, and the land can also be subject to a CPO unless remedied.
The LPT local property tax is a fraction of 1% p.a. typically 0.1% (subject to regional and valuation variables).
Here in California, we tend to have total property tax rates of ~1.5%, which includes improvements like buildings. For various reasons, this is lower than the rest of the country which is more like 2-2.5%. But also, the assessed values of buildings tends to be artificially low in most places. These low assessed values discourage real estate changing hands, because the new owner would often have to pay more.
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.
>>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.
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.
> 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.
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.
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.