If the price of buying a house rises based on demand, how come the price doesn’t fall in areas that have large homeless populations?

Question

If there are so many people who can’t afford housing, why does the cost continue to rise? Shouldn’t the cost fall because there isn’t a demand?

In: Economics

Answer 1

Demand in the way that it is used in economics is dependent on willing and ABLE buyers at current prices. This is not the same as how this word is used when speaking less formally. What you are probably thinking is more like “want” or “need”. Without the ability (financial/resource) to acquire your want or need, this is not translated to “demand” at current prices.