What is the condition for Hawaiian house prices to remain stable despite a rise in housing demand?

The condition for Hawaiian house prices to remain stable despite a rise in housing demand is that supply must be perfectly inelastic. Perfectly inelastic supply means that the quantity of houses available for sale does not change regardless of the price level. In Hawaii, factors such as geographical constraints and zoning regulations can limit the supply of housing, making it less responsive to changes in demand.

When demand rises in a market with perfectly inelastic supply, prices would typically increase as buyers compete for the limited number of available houses. However, without an increase in supply to meet the excess demand, a perfectly inelastic supply can keep house prices stable if demand increases at a rate that does not outstrip the available quantity. In essence, while demand may rise, the inability to effectively increase supply keeps prices from escalating dramatically in the market.

In contrast, if supply were perfectly elastic, any rise in demand would result in a corresponding increase in supply, leading to adjustments in price. Reducing demand or having low interest rates would typically influence market dynamics but do not specifically address the relationship between stable prices and supply conditions in the case of rising demand.