The cost of rent doesn't add up

This week's Acorn featured a cartoon by Eich with the caption, "Home prices are down, why aren't rents?" I don't know if you're trying to make some subtle political point, or if you are indeed clueless, but since you obviously didn't take econ 101, let me give you a primer.

In a free economy, prices always move toward the point of equilibrium where demand equals supply. When supply exceeds demand, prices are pushed downward, and conversely, when demand exceeds supply, they are pushed upward.

Where I suspect we are in today's market is this: Record foreclosures have lead to record numbers of former homeowners needing places to live but without the ability to purchase a home. This translates into a flood of new renters, and an increase in demand for apartments.

Demand is up. The supply is unchanged. Prices (rents) are not going down.

Does that answer your question? Eli Eisenberg Agoura Hills Editor's note: Here's another lesson: More renters are now able to afford home purchases, which forces the rental market down.