am i thinking right re rentals, page-6

Can I point out two important economic concepts that have been neglected: Substitution & Elasticity.

Elasticity says in the long run, demand for anything is perfectly elastic. Why? Because people will find substitute goods and services.

What is a substitute for having a house to yourself? Sharing one with someone else.

With rising unemployment and homeowners getting foreclosed on, multiple generations of families will start moving back in together.

People have used credit to pay for extravagant housing. Now they'll get used to sharing again.

Rents might rise short-term, but their long term prospects are hobbled by substitution.