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When we draw a demand curve, we are varying the price but holding everything else fixed. In particular, we hold fixed the level of income, the prices of other goods and services in the economy, and the tastes of households. If these other factors change, then the market demand curve will shift—that is, the quantity demanded will change at each price.
A leftward shift of the market demand curve for houses, as indicated in ***Figure 4.2 "A Shift in the Market Demand Curve", could be caused by many factors, including the following:
- A decrease in the incomes of households in the market
- Concerns about the future health of the economy
- A reduction in the price of a typical apartment rental
- An increase in the interest rates for mortgages
- A change in social tastes so that buying a house is no longer viewed as a status symbol
Figure 4.2 Figure 4.2 A Shift in the Market Demand Curve
If there is a decrease in demand for houses, then fewer houses are demanded at each price. The demand curve shifts leftward.
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