The Time article makes this clear: “There is reason to worry that distressed home sales – such as foreclosures and short sales – will hinder the housing sector's recovery in 2013". When someone forecloses or sells off their home it means they are selling it. Ultimately, foreclosures and short sales increase the supply of homes on the market. Using Chart 3, we can see the impacts of an increase in supply on the housing market. An increase in supply causes a decrease in the equilibrium price and an increase in the equilibrium quantity. Demand, in the short term, remains unchanged. However, according to the law of demand, as the price falls, more buyers will be encouraged to purchase a home, which should happen in the long term, especially if the price continues to fall. In terms of consumer and producer surplus, consumer surplus will increase and producer surplus will remain ambiguous. After everything we've talked about, another interesting dynamic in the real estate market is related to the elasticity of demand for housing. As we all know, if you don't own a house then you will rent an apartment. In the real estate market, apartments represent a valid substitute for residential ownership. When comparing the two markets, one of the factors we can compare is the elasticity of demand for each type of housing. The elasticity of demand will influence the change in demand as price rises or falls. Based on