Question 4 : My wife and I just moved to Charleston from Atlanta. We are not the

Question

Question 4 : My wife and I just moved to Charleston from Atlanta. We are not the only people moving to Charleston as it is (apparently) one of the Top 10 fastest growing cities in the nations (especially Mount Pleasant). We found a place to live that is relatively similar to the place we lived in Atlanta; however, we are now paying twice as much for rent. Use the supply and demand model (s) to show why housing prices in Charleston are much higher than those in Atlanta. FYI: Atlanta is also one of th e Top 10 fastest growing cities .

Explanation / Answer

The price of the a appartment at place may depend on the following factors:

Demand for the appartments : Higher the demand of the apartments, higher would be the competition among buyers, thus pushing the apartment prices higher.

Supply for the apartments : Lower the supply of the apartments,higher would be the competition among buyers, thus pushing the apartment prices higher.

Paying Capacity of people: Higher the paying capacity of the people higher would be the prices of the apartments.

It also depends on other factors,like places which are tourist spots usually have a higher rent due to extra demand of housing space from the tourists.

Also factors like demographic profile of people, general prefence of the residents, types of common apartments available have an impact on apartment prices.

Even though both Atlanta and Charleston are fast growing, but Charleston is more densly populated thus the relative demand supply gap is higher in charleston as compared to Atlanta.

Also Atlanta has more availalbility of affordable housing due to the development of high rise apartments which have increase the supply of apartments in Atlanta.

Charleston on the other hand is more characterised by independent house, which take up more space and have thereby lower supply.

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