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Urban housing as "caviar"?

 
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Tue Mar 20, 2012 1:09 pm    Post subject: Urban housing as "caviar"? Reply with quote

Not sure if this applies, but it's on my mind, so here goes.

Yesterday I was having this sort of argument about Cities with a fellow in a transit oriented blog.

I was showing him stats on an overall decline in city populations from the 2000-2010 census. His argument was that yes, but valuations for apartments, condoes in the cities are so high that this means that there is greater demand for them.

I countered argued with the example of caviar. Yes, caviar is more expensive than chicken, but that doesn't mean that more people want caviar than chicken. It could also mean that within the pool of people who want caviar, their overall buying power is greater. In fact, we commonly believe there are great, great many more people who desire chicken, but there is also a great number of chickens to be eaten.

He couldn't see my argument.
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PostPosted: Wed Mar 21, 2012 5:03 pm    Post subject: Reply with quote

jabailo wrote:

I was showing him stats on an overall decline in city populations from the 2000-2010 census. His argument was that yes, but valuations for apartments, condoes in the cities are so high that this means that there is greater demand for them.


The answer I would've expected from you is that increased valuation could also be caused by a drop in supply. Without knowing the context, it seems possible that you both implicitly ruled this out. If so, then his argument would be supported. Otherwise, there are several reasons why the supply might drop. The most likely reason based on my intuition would be that people are "spreading out" as average family size decreases and average size of housing per person increases.

jabailo wrote:

I countered argued with the example of caviar. Yes, caviar is more expensive than chicken, but that doesn't mean that more people want caviar than chicken. It could also mean that within the pool of people who want caviar, their overall buying power is greater. In fact, we commonly believe there are great, great many more people who desire chicken, but there is also a great number of chickens to be eaten.

He couldn't see my argument.


It seems like you're trying to do too much at once, without showing your work. Your example of caviar is an example of a case having a limited demand. (Based on the high price, we should conclude that supply is even more limited.)

Beyond that, the first example is dynamic in that it involves changing prices, and your caviar example is static. You've got a little idea nestled in there, something like: if the supply of caviar increased, the price would drop off quickly because of limited demand. And. Urban housing is like this kind of "acquired-taste, limited audience luxury", like caviar. Even if it were cheaper, we wouldn't want it because we prefer <chicken>, that is, we prefer non-urban housing.

Your response seem less like a refutation than a begging of the question of whether there is such a limited demand for urban housing. Indeed, whether it follows the same kind of demand curve as caviar does.

My own intuition is that, largely, it does not. Still, one could define one's terms, do some data analysis, and draw specific conclusions, it seems to me, so maybe it does.

Guys like you sometimes need to slow down a little and let the rest of us catch up. When you show your work, sometimes you get a smiley face even when your answer is wrong. If your answer is right, well, all the better.
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Thu Mar 22, 2012 10:40 am    Post subject: Reply with quote

Quote:
also be caused by a drop in supply.


The greater point is not how it happens, but that there can be a "market within the market".
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