Market | Median price| Increasing rate of price| Sales (unit)| Increasing rate of sales | Gross sales (million) | Chicago (9 county) | 183,000| 1.7%| 9156| 22%| |
Chicago city | 216,700| 4.7%| 2246| 22%| $ 5.3|
Condo| 250,000| 1.7%| 1405| 28.3%| |
Single family home| 160,000| 3.2%| 841 | 12.7%| |
(Source: summarized by the author)
According to the data shown, the short-term elasticity of demand in each specific market of Chicago real estate can be calculated. The sales (unit) will represent the quantity of demand in each situation so that the increasing rate of sales reflects the change in demand. Furthermore, the increasing rate of price indicates the change in price. Following the formula Ep = (%ΔQ)/(%ΔP), the essay obtained price elasticity of demand in each scenario. 1. EC9 = 12.94; 2. EC=4.68; 3. ECD=16.65; 4. ES=3.97.
Although the rate of elasticity calculated above indicates important market information, it is necessary to explore the long-term data to make further analysis. The essay searched the history data regarding Chicago real estate market. The following chart shows the median sales price and number of sales from Jan 2000 to Jan 2012.
(Source: ‘Chicago Market Trends’, Trulia Inc.)
According to the elasticity formula, the long-term price elasticity of demand in Chicago real estate market is 1.94 (including 9 counties). (The percent of change in price is calculated by...