The housing markets in a certain number of countries have shown in recent years a type of confusing behavior, where an apparent shortage of houses is accompanied by an unusually low transaction rate. People need houses, but they don’t buy them. A good example is Canada. In 2023, he saw a population increased by 3.2%, the highest for decades. Politicians are trying to develop the offer of new houses to match this influx. But at the same time, metropolitan areas such as Toronto have also experienced one of the slowest housing markets ever registered. There are more unsold condominiums in Toronto than in any time in history.
Depending on the conventional economy, the law of supply and demand stipulates that the price of all goods, including a roof over your head, will adapt so that the market breaks. However, instead of cleaning, the housing markets become dark. So what’s going on? To understand this enigma, a useful analogy can be found in an even more annoying phenomenon, which disturbed physicists at the turn of the previous century: the photoelectric effect.
Sparkle
The photoelectric effect refers to the trend of certain materials to emit electrons when the light is shiny on them. At the end of the 19th century, physicists demonstrated it by experiments in which they placed two metallic plates close to each other in an evacuated pot, connected the plates to the opposite poles of a battery and lit the loaded plate negatively. If the conditions were correct, then the light would dislodge the electrons, which went to the other, a positively loaded plate, in the form of a sudden spark. According to classical physics, the energy of the electrons emitted should depend only on the intensity (brightness) of the light source. Make a bright light shine, get a greater spark. But in practice, it turned out that what was really intended was the color: blue light has created a greater spark than red light. And depending on the material, for some colors, no amount of light would work.
What counts is not the total number of buyers (the brightness) but how much each buyer can really spend (color)
In an article of 1905 – one of the flows of results, including its famous formula E = MC2, which would define the new physics – Albert Einstein showed that the photoelectric effect could be explained by the idea, recently proposed by Max Planck, that energy is only transmitted in discreet pieces known as Quanta, Latin for “how much”. According to this theory, the electrons were issued when individual amounts of light hit individual atoms – which meant what was counting was not total energy, but the energy of each quantum of light. And it was measured by color.
Consider the metal plate as an atom market, each selling electrons at a particular price. The Light represents the power of expenditure of individual buyers. Brilliant red bursts on the plate, it’s like sending a lot of low -budget buyers in a high -end store. No matter how many there are, expensive electrons remain firmly locked in their boxes. The high frequency blue light, on the other hand, is like a cruise boat full of high spending that snatch the electrons from the shelves.
Blues
Einstein of course did not use a shopping metaphor – he gave his newspaper the prudent title “ on a heuristic point of view concerning the nature of the light ” – but it was clear that, unlike most of His contemporaries, he saw these light quarters (now known as photons) not as mathematical abstractions, but as real things. As he wrote, “Energy, during the propagation of a radius of light, is not permanently distributed over spaces increasing regularly, but it consists of a finished number of quanta energy At space points, moving without dividing and capable of being absorbed or generated only as a touch. »»
It seems mysterious when applied to light, but again is similar to the way we carry out financial transactions. When you pay in a store, there is not a small needle that shows that the money escaping from your account – it is rather a single discreet bump. When you buy a house, you need a quantum of money for a deposit – and you generally cannot attack with other people, at least if you expect them With you.
In fact, comparison with photons is more than an analogy, because as the quantum economy shows, it turns out that you can model transactions using the same type of mathematics as that used to model light particles . So, for a model of the housing market, which still counts is not the total number of buyers (brightness), but how many buyers can really spend (color).
Central banks will undoubtedly try to relaunch the markets by further reducing interest rates, in the hope of generating a spark. In the meantime, if you want to buy a house in a country like Canada, what matters is the color of your money.