Thursday, October 20, 2011

my question

Why doesn't the land bank just use all their money and demolish a lot of houses. On the supply and demand diagram we saw in class on Thursday. While the demand for housing is dropping, the supply is fixed or perhaps growing slightly. To fix the market, the supply needs to be adjusted, this can only happen if we destroy broken down homes. Building new homes just seems like a waste of money. This is how I see the problem, but maybe I am overlooking something important. help me out!


  1. The problem isn't necessarily supply-side. Lots of people want houses, the problem on the demand-side is a lack of money. Mass demolition would, essentially, artificially prop up the housing market while ignoring the underlying, fundamental issue (i.e. a weak economy).

    Demolition should be seen more as a last resort (such as with blighted properties and houses that are magnets to crime) rather than a primary tool. Empty vacant lots are not much better than an empty vacant house, especially when the houses can be occupied if it is just a matter of loan modifications or other alternatives.

  2. Matt is right. There needs to be an understanding of the economics of a community so programs can be developed to help people afford houses. Demolition should be the last resort.