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Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses e

Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased. In other words NINJAs (no income, no job applications) were being rubber stamped for million dollar plus homes with $0 down and 103% financing. And so prices continued to go up because the next NINJA would be approved to buy yesterday's million dollar house of 2 million today. The same conditions don't exist with ICO tokens.

runeks 9y ago
> Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased. Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual, and why would they do that unless they expected the price to increase? The increase in supply of loans happened because people bought houses expecting a profit. So increase in credit supply is a secondary effect that occurs when people are more willing than usual to buy houses on credit. And people are willing to this when they expect a profit.
- deleted 9y ago
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- will_brown 9y ago
  >Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual Because the regulations that limited supply of loans disappeared. Consider that many more people want a million dollar home than can qualify for the loan (afford it). Think about how much a single change in regulation would effect the number of people who can qualify for the loan/afford the $1M, example: cash down payment. How many more people can afford a $1M if the regulations for the loan approval require cash down of: 100%, 20% or -3% where the bank pays you $30,000 cash to take the $1M loan to buy the house. Allowing people to finance 103% of a $1M home significantly changes the number of people who can act on the want (demand), to the extent supply of the homes drops and as a result their prices artificially increase supported by more bad loans.

runeks 9y ago

> Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased. Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual, and why would they do that unless they expected the price to increase? The increase in supply of loans happened because people bought houses expecting a profit. So increase in credit supply is a secondary effect that occurs when people are more willing than usual to buy houses on credit. And people are willing to this when they expect a profit.

deleted 9y ago
[deleted]
will_brown 9y ago
>Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual Because the regulations that limited supply of loans disappeared. Consider that many more people want a million dollar home than can qualify for the loan (afford it). Think about how much a single change in regulation would effect the number of people who can qualify for the loan/afford the $1M, example: cash down payment. How many more people can afford a $1M if the regulations for the loan approval require cash down of: 100%, 20% or -3% where the bank pays you $30,000 cash to take the $1M loan to buy the house. Allowing people to finance 103% of a $1M home significantly changes the number of people who can act on the want (demand), to the extent supply of the homes drops and as a result their prices artificially increase supported by more bad loans.