Supply and Demand
Name
University of Phoenix

Supply and Demand People who are planning to buy a new house should first be well informed about the status of their new locality’s real estate market. The housing market is strongly governed by certain economic conditions, and understanding the economic trend will allow interested buyers to wisely choose the best price for their new house. It is also an established fact that the business conditions can also influence the real estate market; however, the huge aspect that will truly affect housing prices is still the law of supply and demand. The principle of supply and demand is an economic principle that is applicable to all commodities whether material or immaterial. It is a principle that establishes the relationship between the price of the product to its availability and supply. So for example, if there is a high demand for a product that currently has low supply, the tendency is for the prices to be higher since there is the security of the market that can support the price imposed. On the other hand, if the demand for a certain product is low, but the supply is high, then its price will naturally decrease simply because of its high availability in the market (Mankiw, 2004). The homebuilding industry originally started out of the human needs to have stable and hardened shelters that can provide them with long term protection and comfort, especially when they are already starting to build their own families. From this major necessity came humans’ initiative of turning this into a profitable business, thus the real estate business. During the few attempts of building houses for profit, no one really knew that this kind of business would also be one of those ‘products’ that will strongly be connected to the economy. Houses will always stay as human necessity, and because of