According to Wikipedia.org, the definition of price elasticity of demand is “…the measure of responsiveness in the quantity demanded for a commodity as a result of change in price of the same commodity…” – well we all know that Real Estate is not a commodity. But boy does it display price elasticity.
For the sixth straight month, residential real estate units sold in Florida were higher than the same month a year ago. 9,858 homes were sold in February 2009 (vs 8,181 in February 2008). One clear reason is that prices are down significantly in that same period – 29.8%.
Forgive us for overstating the obvious – but to oversimplify it, when prices drop ~30%, units sold go up 20%. Hello price elasticity of demand. Don’t you love it when simple things prove true?
