Essay about The Rise Of Average Home Prices

873 Words Jul 11th, 2015 4 Pages
The article was about the rise of average home prices in Manhattan. It was reported that the rise in price was resulted by three factors: stronger economy in the U.S, continued demand for housing, and slow growth in supply or low inventory level. There is a slow growth of supply because some sellers were just hesitant to sell their property since they are often outbid, turned down for loans or they just could not find what they want. With the new developments in the market, not only the locals but also international buyers, particularly Chinese investors, would have a greater demand for housing. The new housing developers saw the opportunity of this continuous demand for new housing. Triggered by these positive responds, the developers tried to increase the price as high as possible by providing luxurious condos with great amenities and view. Although this encourages more foreign buyers to invest more of these properties, it was also reported that sales declined by around 10% in the second quarter of 2014 due to the very high prices set up by the developers.
Based on what I have studied in class, I think this article is related to the change in demand and supply of housing in Manhattan that leads to a higher equilibrium price. The improvements that have been made attracted people to own these properties, and hence increases the demand for them. This causes the demand curve of housing to shift to the right. The price of housing was further affected by the slow growth in the…

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