He is saying that lower interest rates & higher incomes increase demand. In itself that is reasonable, but the question is whether it is enough to explain the soaring costs of housing. If you know nothing about economics & you have to choose between Dean Baker & someone who predicted a 36,000 NASDAQ ....
On Tue, Jul 27, 2004 at 03:48:50PM -0400, Charles Brown wrote: > by Perelman, Michael > > -clip- > > > Mr. Hassett of the conservative American Enterprise Institute thinks > housing prices will be pretty much O.K. He acknowledges there might be > some bubble dynamics at play in some regions. But he argues that for the > most part people are paying more for homes because their incomes are > higher and interest rates are lower, reducing the cost to own a home. > > ^^^^^ > > CB: Sounds like he is saying people are paying more for homes because the > cost of them is less. > > Isn't the market theory of prices supposed to be determined by supply and > demand ? Yet supply of houses is not less, and demand is not more, so why > higher prices , by that theory ? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
