3 ms·
You bring up a good point. But there are other important reasons. Particularly the availability of cheap money for speculation in the housing market. The reason
by geysersam 4y ago
You bring up a good point. But there are other important reasons. Particularly the availability of cheap money for speculation in the housing market. The reason for this is the historically low interest rates.
- bamboozled 4y agoWhat happens when the interest rates go back up? Let's say they go from < 1% to > 10%?
- geysersam 4y agoIf we're lucky, the market recalibrates on a more affordable level. Workers start seeing real wage increases. Speculation and stimulus gives way to real economic development. If we're unlucky, the interest rates are not allowed to increase for fear of falling house prices.
- astrange 4y agoThat just means construction has been made illegal. There's no reason "cheap money for speculation" would be easier to get than "cheap money for construction" otherwise; speculation is riskier! And when interest rates go back up, it gets even harder to finance construction.
- geysersam 4y agoThere is money for constructing large expensive apartments who people who can acquire a bank loan would like to buy as an investment. There is little money for constructing cheap small simple rentals, because rentals are paid by wages, not inflated loans. But this is the segment where the demand is highest. The cheap mortgages distorts the price signals, making the market less efficient.