3 ms·
The main thing that changed was an explosion of cheap money to borrow, and high construction costs to pay with it. ALL real estate, everywhere in America, incl
by hapless 9y ago
The main thing that changed was an explosion of cheap money to borrow, and high construction costs to pay with it.
ALL real estate, everywhere in America, including places that are in no way bound by land, has exploded in cost against inflation.
In no state nor Puerto Rico will the minimum wage pay for an apartment.
- closeparen 9y agoAs I understand it, nterest rates determine purchase prices in a way that’s mostly irrelevant to you unless you’re a cash buyer. Lower housing prices combined with proportionally higher interest rates will not make housing more affordable. You’ll just pay more interest and less principal. You don’t borrow to pay rent. Low interest rates and high asset prices could increase the rate of condo conversion, diminishing the supply of rental housing, but doesn’t in general explain exploding rents.
- hapless 9y agoRental markets and real estate costs are only loosely coupled. A tidal wave of cheap money does drive up costs. Most home purchasers have a fixed budget to spend on a home, whether that money pays down interest or pays down principal. Low interest = higher housing prices, because borrowers will borrow more money at the lower rate. This is equally true for apartment construction -- if firms can borrow money cheaply, they borrow more of it, and bid more for land.