Market Equilibrium In Canada

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Market Equilibrium Demonstrated Through Canadian Home Prices Highlighted in the article, “Canadian Home Prices Predicted to rise despite Economic Uncertainty”, it is noted that the Canadian housing market have shown shocking results as they continue to increase. Thus far economic equilibrium has allowed the market to remain stable, however, due to increased oil prices and mortgage debt there are predictions of a downfall soon to come. Inevitably, if the market over predicts buyers preferred price the market drop predictions will come to be in a devastating blow, which the US experienced several years ago. Without a doubt the Canadian housing market has shown irregular percent increases without any current consequences. This phenomenon can…show more content…
This point is important in balancing prices as it reflects an agreement between the seller and buyer. Evidently, the price of houses are able to increase because buys still find houses a normal good (as the economy increases the demand of this good, houses, also increases) at these higher prices. Due to this the market will continue advancing prices until they have reached an agreeable point, the market equilibrium, in which buyers are not willing to pay any high for a house. If markets reach a point higher than this, they will see an excess in houses that are not be sold, as houses transition to a luxury good. This occurrence would force markets to decrease prices, in order to make their…show more content…
As long as the housing markets focus is on making money an equilibrium will be reachable, and this far this is the case. In saying this however, there are other factors that could cause a shift along the demand and supply curves. For instance, the article mentions that there has been an increase in oil prices in many parts of the country as well as job loss. These two situations can easily change the amount one is willing to spend on a house. This situation can be described through a leftward shift of the demand curve which will result in a decrease in quantity supply and prices. Undoubtedly, this occurrence will upset the housing market, as they lose money, so housing prices will be forced to drop as a result. On the other hand, if prices were to drop too much the opposite would be true, and instead of having an excess in supply, there is a large demand for houses, which occurring now, and prices will be

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