Use supply and demand economic theory and diagram to explain why the prices of houses has changed so much over the last 3 years.
I just need topics to use to write about
To explain why the prices of houses have changed significantly over the last three years using supply and demand economic theory, you can focus on the following topics:
1. Demand Factors:
- Changes in population: Analyze if the population of the area has increased or decreased over the past three years. Demographic changes can affect demand for housing.
- Economic growth: Investigate whether the local economy has experienced growth or slowdowns. Economic expansion generally leads to increased demand for housing.
- Interest rates: Discuss how changes in interest rates affect the cost of borrowing for potential homebuyers, influencing their demand for houses.
- Income levels: Examine how changes in average income levels within the local area may impact the demand for housing.
2. Supply Factors:
- Construction activity: Examine the level of construction activity within the local area. Increased construction of new houses can lead to an increase in the supply, potentially affecting prices.
- Land availability: Discuss whether there are limitations or expansions in terms of available land for housing development. Land scarcity can impact housing prices.
- Government policies: Analyze any changes in government regulations or zoning laws that may have affected the ability to build or sell houses in the area.
3. Market Equilibrium and Price Changes:
- Explain the concept of market equilibrium, where supply and demand intersect to determine the price at which houses are bought and sold.
- Identify any imbalances between supply and demand forces within the housing market over the three-year period.
- Use a supply and demand diagram to visually illustrate how shifts in supply and demand curves can lead to changes in equilibrium price levels.
- Discuss how changes in demand and supply factors outlined above may have shifted the equilibrium price of houses over the last three years.
Remember to support your explanations with relevant data, statistics, and real-world examples to provide a comprehensive analysis of the housing market dynamics in relation to supply and demand theory.