Details: In this activity you will need to go to the realtor.com website. Follow the instructions for "Finding a Home", and check housing prices for a 3-bedroom, 2-bath house in several cities, for example, San Francisco, CA; Topeka, KS; Dallas, TX; Concord MA; and Seattle, WA. Explain why housing prices vary from city to city. Clearly explain how supply and demand affect the prices of the homes and be sure to show your work.
To complete this IP, use the standard house, 3-bedroom, 2-bath house. Compare this standard house in different locations in the US by collecting the price information. The differences in the price of "same house" in different locations can be explained using demand and supply. ("location" is NOT an answer to this IP) The housing price is determined by demand and supply of housing. State the determinants of demand and of supply that are consistent with economic theory and are plausible. (1) The determinants of demand are the factors that affect the decision to buy s house and the maximum price that the buyer will pay. . (2) The determinants of supply are the factors that affect the decision to sell another unit and the minimum price that the seller will accept. . Excess demand and excess supply are generated if demand or supply shifts. The learning objective is to demonstrate the proper use of concepts in market analysis. In particular there should be a discussion on how the market responds to excess demand and a discussion on how the market responds to excess supply. There should be a discussion on how changes in determinants of demand and changes in the determinants of supply affect the housing market. Excess demand and excess supply should be included in your analysis Warning: you are not required to "prove" or justify your selection of the determinants of demand and supply. But your discussion and selection must be reasonable.
I looked up homes in San Francisco, Dallas, and Topeka and limited the search to single family homes. You may want to do some additional cities on your own. The prices were as follows:
San Francisco: the lowest priced homes were around $500,000 with most around $600,000
Topeka: the oldest, smallest homes were only $20,000 with the most expensive around $100,000
Dallas: The low end homes were on the same price level as those of Topeka. But the high end encompasses vast multi million dollar mansions which don't exist in Kansas. Also, there are far more houses available than there are in Topeka.
We can examine these markets graphically using a downward sloping demand curve and an upward sloping supply curve. In addition to their relative positions, price is also determined by their slopes or elasticities.
Both supply and demand vary in these cities. Supply will be determined by the number of people leaving the area, or the number of new ...
Comparison of standard houses in different locations in the US. Discussion of how the market responds to excess demand and excess supply.