Quote:
Originally Posted by RodKnock
In real estate, it's called the Theory of Progression (The Theory of Regression is the opposite).
If new houses become more expensive, then the used stock of homes in the neighborhood will trend up as well. Buyers who can't afford the new homes, then will look at the used stock more and thus the used stock will move or progress towards the price of the new stock because of increased demand of the used stock of homes.
|
Nice theory. Don't think that it will really hold up well with a car. If the theory worked on all goods then what an amazing world we would live in. Everything in essence would turn to gold and prices would sky rocket. With this theory you are basically constrained by the land the house is built on. I could buy a Kirkham from anyone in any state. Sure I have to pay for shipping but that is a small percent of the purchase price anyway.
Others have mentioned that the supply is limited. Which is true. The demand is limited as well. The demand will be even more limited with the price higher. It all evens itself out.
Current cars will be sold for many reasons and some will be sold for less and some will be sold for more. The used car market does not change because of the price increase.