this post was submitted on 15 Apr 2025
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submitted 5 days ago by [email protected] to c/[email protected]
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Source: https://bsky.app/profile/mugrimm.bsky.social/post/3lmsej4cxqk2n

Tag: Matthew Yglesias

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[โ€“] [email protected] 8 points 5 days ago (1 children)

It's called inelastic demand when price changes have very small changes to demand. Supply and demand are very relevant to this situation.

With inelastic demand a small reduction in supply can cause a large increase in price. When paired with something like housing where new production takes a long time to become available you end up in a rapid inflationary period with the price.

It's a situation where owning the asset and being able to rent it greatly favors current owners who have more then their personal demand. This leads to them being able to buy more and more of the asset and continue to increase price.

The current housing situation in the US is exactly what is predicted. It's why we used to have programs like low cost housing and first time home buyer loans and grants.

Fannie Mae becoming a publicly traded company in 1968 was the beginning of the end of an easy path to home ownership.

[โ€“] [email protected] 1 points 5 days ago* (last edited 5 days ago)

Yes, I am aware of how the capitalist system works. And I am aware that it is working as intended. My statement is a statement of values.

Supply and demand are relevant, but the market still doesn't allocate resources effectively and requires regulation to prevent predatory housing prices because of said inelastic demand.

So sure, if you want to make a semantic argument, supply and demand "applies".

Does it efficiently and effectively get housing to those who need it? Absolutely not.

My statement is a criticism of capitalism and the way it works.