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John Wake's avatar

Cool concept! Might work even better explaining real estate. I'll have to think it through.

When prices go up, isn't the supply (for sale) supposed to increase? But that doesn't seem to work in real estate except maybe over the long run, years.

In the short run, following the double-demand idea, it could be that higher prices increase the demand from current owners. Owners like to hold stuff more when it's increasing in value more, so supply falls instead of increases when prices are increasing fast.

Then combine that with incredibly inelastic stock of houses (versus supply of houses for sale).

https://twitter.com/JohnWake/status/1471221496861249540?s=20

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John K's avatar

Author has changed underlying definitions of demand and incorrectly. Demand presumes you do not have and wish to have. Supply means you already possess it. Therefore, you can’t ‘demand’ something you already possess: if so, pay yourself $100,000 for your own car. Also, a supply curve at the start is near zero…

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