[9rx]

> And here I thought people who want to live in houses add to demand for housing.

Desire is a necessary component in demand, but it also requires willingness at a given price point. If houses are selling for $1,000,000 and you only have $500,000 to spend, then no matter how much you dream every night about having a home, you are not a contributor to demand.

[triceratops]

Counterpoint: houses sell for $1,000,000 because there are more people with $500,000 (and every other number less than $1,000,000) who want those houses than there are houses.

[9rx]

How is that a counterpoint? It says the same thing with different words.

[Dylan16807]

You said the person with 500k is not contributing to demand, they said the person with 500k is contributing to demand.

[9rx]

Said comment doesn't mention demand. However, it is true that supply and demand normally find equilibrium, which is the concept the comment was trying to describe. Which is the same concept I described. In simple terms, if you have 10 houses for sale (supply), then in a normally functioning market there will only be 10 people with the desire and willingness to buy them (demand). Many more may have the desire to own a home, but factors like price see their willingness disappear.

There are two exceptions:

- Surplus: When the price is too high and is unable to fall. Where supply exceeds demand. This manifests as there being houses trying to be sold, but that nobody wants to buy.

- Shortage: When the price is too low and is unable to rise. Where demand exceeds supply. This manifests in non-price mechanisms taking over. You might, for example, see houses get sold via lottery as a potentially higher bidder is prevented (e.g. the government stepped in and started enforcing a price ceiling) from offering more.

There may be some argument that there is a housing surplus in some markets, where houses are for sale but never find a willing buyer. However, it seems most houses eventually sell. There is likely no argument for there being a housing shortage by the technical definition. If you have unlimited money, you can surely buy any house on the market.

There are always exceptions, but it is pretty safe to say that supply and demand are finding equilibrium in most housing markets.