– I keep hearing the housing market in the USA had such a price surge because of demand increase and a lack of housing. Why did happen all of a sudden? There wasn’t some huge increase in people too.

Question

Secondly- What would it take for prices to change?

In: Economics

Answer 1

There are increased housing needs as population grows, albeit not drastically. Changes in “nuclear family” dynamics also contributes to increased need, but a lot of it has to do with older existing housing not meeting modern needs, along with population migration. We believe in growth for growth’s sake in the U.S., which doesn’t just apply to the stock market and corporate profits. One of the elements of it is that companies migrate and different cities have booms and busts for popularity of economic growth, which drives population migration for jobs. Also, regional boom and bust drives migration by need for jobs as well as sharp changes in local housing values. A lot of people move because it’s suddenly a lot cheaper/more desirable to live in a place that suddenly has more going on or possibly a lower cost of living. Urbanization, as others have noted, is also a factor. Small towns support population growth less and less, in some cases to the extent that more isolated communities effectively become modern ghost towns. Unfortunately all of this often results in surplus housing in some places and supply deficiencies in others, which again impacts cost of living, etc.