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Article: Rents Rise as Supply and Demand Favors Landlords Guardian: Sources: http://www.guardian.co.uk/money/2010/sep/17/rents-rise-landlords-buy-to-let, Patrick Collinson February 20, 2011

Short Summary: This article is mainly about the rise in prices for buying homes and how this actually benefits the landlords that let people rent homes instead. Many first time home buyers are pushed out of the purchase market because they cannot afford the home or even the mortgage that is suppose to aid them to buy a home. Thus, to find a place a live which is a necessity, they must find an alternative, a substitute home/good which is to rent apartments instead. This mindset benefits the landlords because more and more people are alternating from buying homes to renting homes. There is a shift in the demand curve to the right due the the determinants of demand of substitute goods. Unfortunately, due to the sharp increase of people renting homes, some landlords have become more corrupt and have created scams. Research in this article has claimed that 1 million British people have been cheated by landlords.

Vocabulary: Tenants: A person who occupies land or property rented from a landlord. Surplus: an excess of production or supply over demand Landlords: A person who rents land, or a building, or an apartment to a tenant. Determinants of Demand: Factors that decisively affects the nature or outcome of demand, that affect how willingness and ability for the consumers to purchase the good. Purchase Market: Driven by broad economic factors such as emarket Mortgage: A loan on a purchase on a property, on the condition that it shall be returned on payment of the debt within a certain period Substitute goods: Different goods that satisfy the same needs of the consumers and, therefore, can be used to replace one another. Equilibrium: When quantity supplied matches quantity demanded at equilibrium. Demand: How much a consumer is willing and able to buy a product. Shiftson Curve for Demand Curve: a shift to left or right is made to match the quantity supplied. Income distribution: The distribution of wages earned across a company, industry , or country.Diagram: In this diagram, it can be seen that the substitute good of buying homes has increased the demand of those who are renting homes because the prices are so outrageously high that people have no choice and must rent instead.

Diagram: In this diagram, it can be seen that the substitute good of buying homes has increased the demand of those who are renting homes because the prices are so outrageously high that people have no choice and must rent instead. Personal Opinion: I think this is a good example of supply and demand in action and a good example for how substitute goods affect one another. I can also see this increase in homes in Shanghai where the apartment buildings prices are skyrocketing. Some people are not fitting the income distribution the real estate sellers have in mind thus the majority of the people must find alternatives. In this way the real estate sellers lose more money if they sell too little homes due ot the high prices. There may be a surplus of real estate homes that have high prices. The economic theory of supply and demand fits perfectly with the example where demand is increased with renting homes because of the decrease in demand for buying homes. I believe that if they will lose money, the real estates sellers will lower their prices and people may once again easily buy homes and pay their mortgages. I also believe that due to the large amount of people renting homes, that it is dangerous for these people because the landlords are taking advantage of their money and creating scams. I believe that real estate homes should lower their prices and even out the amount of people renting and buying homes.