A recent story on All Things Considered offers a good example of how housing markets respond to “shocks.” The most recent shock, the mortgage crisis, shifted a lot of prospective homebuyers to put off the task of purchasing a home, instead opting for safer, short-term rental options.
In the feature, NPR reports that rents in New York fell immediately following the financial crisis, which makes sense. In the short-run, many people have less income they’re willing to put toward rentals. But over the intermediate run (i.e. now), we’ve got a different market of consumers, many looking for spaces as renters, not homeowners. Continue reading