How do Foreclosures affect the Supply and Demand curve in the housing market?

Ex) demand would go up..or supply?
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And more specifically- how do foreclosures affect consumer and producer surplus?
Thanks!

By | 2013-08-26T05:18:59+00:00 August 26th, 2013|Mortgages Home Loans Interest Rate|2 Comments

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2 Comments

  1. da_goat887 August 26, 2013 at 6:42 AM - Reply

    Supply goes up, because more homes become available as people are forced out of them, but demand would remain unchanged, but it’s likely that quantity demanded would increase as the supply of homes increase, prices will decrease.

    Consumer surplus increases, producer decreases

  2. Anjaree August 26, 2013 at 5:45 AM - Reply

    As we all know, it forces the house price down, the supply increases and floods the market. The building of new houses come to a full stop.The banks will not give the loans so easy. Some buyers have a credit black list. The government has intervened the market so far to prolong the foreclosure. But the damages were en mass beyond the help.

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