Shown here is a diagram of a Real Estate Market where in which variables like price, supply and demand are found to be present and play a role in the sides of the buyers and the sellers.
When prices go up the supply of sellers increase while the demand of buyers decrease. When prices go down the supply of buyers increase in the real estate market while the demand of sellers decreases.
It is the simple economic rule found in plain sight in the real estate market.
1 - Price elasticity of Supply with the sellers is high due to their ability to adapt to sudden changes in prices in the market.
2 - Demand elasticity of price on the other hand was not proven to be as high in the calculations since there was no factual data as to how fast the buyers reacted to an increase in supply or a decrease in price. Although seen is the increase in demand when a the price is lowered.
3 - Increases in Median Price lead to a increased Supply from the Sellers.
4 - Decrease in Median Price lead to a increased demand from the Buyers.
This diagram implies the simple supply and
demand concept to show the relationship of different roles in the real estate
market and how they affect the price of houses, buyers and sellers.
The motivations are based on the concept, when
the houses’ price goes down (demand goes down) there will be more people
interested in buy a new house (supply goes up).
The simulation will show the range within 36
months as units. It demonstrates the comparison of price, houses buyers and
Houses for sale.
THE BROKEN LINK BETWEEN SUPPLY AND DEMAND CREATES TURBULENT CHAOTIC DESTRUCTION
The existing global capitalistic growth paradigm is totally flawed
Growth in supply and productivity is a summation of variables as is demand ... when the link between them is broken by catastrophic failure in a component the creation of unpredictable chaotic turbulence puts the controls ito a situation that will never return the system to its initial conditions as it is STIC system (Lorenz)
The chaotic turbulence is the result of the concept of infinite bigness this has been the destructive influence on all empires and now shown up by Feigenbaum numbers and Dunbar numbers for neural netwoirks
See Guy Lakeman Bubble Theory for more details on keeping systems within finite working containers (villages communities)
This simple high level model shows the basic feedback balancing loop for health services. There are many other loops and component interactions at multiple scales that add to the complexity See areas of expenditure IM for some component splits and hospital value IM for some service linkages
The Insight shown demonstrates how demand and supply in a real estate market can affect pricing.
Demand, Supply and Price have been represented by stocks. Each has an inflow where it has an increase in stock, and a corresponding outflow where stock is decreased.
Linking each stock and flow is a variable that changes that which it is linked to. These have been labelled appropriately. Each variable takes a decimal value and multiplies it with that it is linked to, such as the rate of demand affecting the price set as 0.001*Demand. This is to generate the loops required to show the rise and fall in price, demand and supply.
Adjustments can be made to the price, supply and demand stocks to simulate different scenarios. Price can be between 400 (400,000) and 1000 (1,000,000) in accordance to average housing prices. Demand and supply can be between 0 (0%) and 100 (100%), although having these set as realistic figures will demonstrate the simulation best.
Each simulation can be focused on how either demand and price interact over time or supply and price. These are shown in different tabs.
When the simulation is carried out, the way in which demand and supply rates affect pricing can be seen. Demand and supply are shown with price following shortly after with a slight delay, since changes in market behavior does not immediately affect prices of housing.
It should also be noted that the lines that represent each stock do not directly reflect the prices of housing in reality. Prices do not fluctuate so rapidly from 400 to near 0 like they do on the graph, however these are just representations of the interactions between each stock in a marketplace.
The real estate market is heavily influenced by social and economical factors that effect the price of dwellings. Two of the main factors that contribute to not only the housing market but most consumables are supply and demand.
Supply is the amount of one good or service in that market. A market driven economy could utilize supply to regulate price. Generally, if the supply is higher than the demand for that good the price will be lower. If the supply is lower than the demand, the price will tend to increase.
Demand is the amount of consumers that want/need that good or service. Price is also influenced by demand. Generally, if the demand is higher than the supply the price will increase. If the demand is lower than the supply, the price tends to decrease.
Price can be derived from demand and supply.
The following model depicts how the changes in supply and demand of Households effect pricing. The sliders replicate how each of the variables interact with price.
Secondary factors, such as interest rate, foreign investors and government policies also all weigh in on determining a price for a dwelling.
The model shown provides a visual representation of the processes that occur when Buyers (Demand), the Sale of Homes (Supply) as well as Price interact when it comes to the Real Estate Marketplace.
Price is the main factor that ultimately influences the movement of both supply and demand within the real estate marketplace. Those considering purchasing a new home will be influenced to buy when prices are lower than that of the median price whereas sellers prefer to sell their homes higher than the median price in order to make a higher return.
Clone of Clone 4of IM 27348, of JPS IM-27150 of original JPS IM-14117 See reference in diagram notes. WIP for Environment part of primary care regional model
The problem to be modeled is about the changing
customer needs, preferences and perceptions based on the reducing demand for
certain goods and services. For example, in the recent times, people have shifted
to healthier natural foods, thus reducing the demand for junk foods.
Clone of Clone 4of IM 27348, of JPS IM-27150 of original JPS IM-14117 See reference in diagram notes. WIP for Environment part of primary care regional model
