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In practice, since people can afford to pay $1738 USD per month, they bid up the price of the same house to =FV(0.03/12;10*12;-1738) or 243 000 USD.
by anthuswilliams 6y ago
In practice, since people can afford to pay $1738 USD per month, they bid up the price of the same house to =FV(0.03/12;10*12;-1738) or 243 000 USD.
- saberdancer 6y agoAh so the problem is that the supply of houses is very limited and prices are dictated by amount average house buyer for specific house can afford. It makes sense. This is another proof why government shouldn't intervene into the market by offering loans or subsidies. Usually what they end up doing is completely opposite of the intention. Instead of subsidizing young buyers to buy homes for less cost, they end up subsidizing the owners of the houses.