<P> The diagram to the right shows the effects of depreciation . If the supply of existing housing deteriorates due to wear, then the stock of housing supply depreciates . Because of this, the supply of housing (SHo) will shift to the left (to SH1) resulting in a new equilibrium demand of R1 (since the amount of homes decreased, but demand still exists). The increase of demand from Ro to R1 will shift the value function up (from Vo to V1). As a result, more houses can be produced profitably and housing starts will increase (from HSo to HS1). Then the supply of housing will shift back to its initial position (SH1 to SHo). </P> <P> The diagram on the right shows the effects of an increase in demand in the short run . If there is an increase in the demand for housing, such as the shift from Do to D1 there will be either a price or quantity adjustment, or both . For the price to stay the same, the supply of housing must increase . That is, supply SHo must increase by HS . </P> <P> The diagram on the right shows the effects of an increase in costs in the short - run . If construction costs increase (say from CCo to CC1), developers will find their business less profitable and will be more selective in their ventures . In addition some developers may leave the industry . The quantity of housing starts will decrease (HSo to HS1). This will eventually reduce the level of supply (from SHo to SH1) as the existing stock of housing depreciates . Prices will tend to rise (from Ro to R1). </P> <P> There are different ways of real estate financing: governmental and commercial sources and institutions . A homebuyer or builder can obtain financial aid from savings and loan associations, commercial banks, savings banks, mortgage bankers and brokers, life insurance companies, credit unions, federal agencies, individual investors, and builders . </P>

The philippine housing shortage and the real state boom