Monday 18 April 2016

Housing price and wealth gap

The difference of housing prices is due to the density of resources. Locations with more resources have higher value, thus higher housing prices. Moreover, because of productivity and efficiency, it is better to concentrate resources. With connection to more resources, firms and individuals could achieve higher goals. However, rising property prices is a cause of widening the wealth gap. As the prices of the properties with connecting to more resources tend to rise faster than the prices of the properties with connecting to fewer resources. Is it possible to mitigate such problem? It could be possible as information technology could shorten the virtual distance between individuals and resources and the physical distance could become less and less important due to the technology innovation. However, currently it needs time and the physical distance is still important and decisive.

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