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The problem of “high house prices” is just imprecise language for “high cost of housing” - whether the cost is interest or principal is not terribly consequenti

• AnthonyMouse 8y ago
  > The problem of “high house prices” is just imprecise language for “high cost of housing” - whether the cost is interest or principal is not terribly consequential. It actually is, because it affects what can be done about it. If costs are high because interest rates are high, buyers can lower their costs by paying down principal or taking a shorter mortgage. It's frequently the case that, because most of the payment is taxes, insurance and interest, a 30 year mortgage is e.g. $1500/month whereas a 15 year mortgage is only $1700/month, and the difference between them shrinks as interest rates rise (and original principal amounts fall). Which means more people can afford to stop having a mortgage payment after 15 years rather than 30. It should also result in less resistance to densification, because people are less worried about home values when they're lower to begin with.