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by hiAndrewQuinn 529 days ago
To be precise, "oversupply" here means "supply which has not yet reached the market clearing price". You could theoretically cause San Francisco to have an oversupply of housing if you waved a magic wand and made everyone selling their homes right now double their prices, but they would probably fall back to the natural equilibrium. Or, if they didn't, and those homes actually sold, you could describe the current situation as undersupplied.

Oversupply is almost definitionally a bad thing because it means 10 families are trying and falling to offload their $20,000 home for $80,000, and for whatever reason none of them are willing to lower their price to the sane level. That's an obvious market failure, even if its causes aren't well understood. And when I say "curb the oversupply" I actually mean "put or rent these properties on the market at prices where they will actually get used."
1 comments
worik 529 days ago
> To be precise, "oversupply" here means "supply which has not yet reached the market clearing price".

That is true for consumer goods where demand can shift to substitutions easily

It is not true for infrastructure goods such as housing. (Housing is infrastructure)

There is a measurable need that can be under or over supplied.

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hiAndrewQuinn 528 days ago
That claim is just false. No one needs to live at exactly 123 Acorn Street, Pierre, South Dakota, USA.

They may have good reasons to want to live there, including "My job is here", "My family is here", and "The only doctor in the world who can treat my exceptionally rare illness lives here". But God will not smite them if USPS starts delivering their mail to a different address. They have many options for figuring out a different place to live, either locally in Pierre, or farther away in a different state or continent.

The fact that the supply and demand curves seemingly move slower in the housing market compared to e.g. the electricity or food markets, which are arguably much more basic "infrastructure goods" (you can survive being homeless if you have food - you can't survive living in a mansion with nothing to eat), doesn't mean they stop being subject to the laws of supply and demand. At worst it means "Plan carefully, because if you miss the mark you will lose a lot of money for a long time." At best it means "Sweet - I wonder if I can make these markets more dynamic with a new company?"

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