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It's more a supply / demand issue than anything to do with mortgages. When an essential good's (housing) demand outstrips supply, all surplus goes to $0 to reac
by jyu 4y ago
It's more a supply / demand issue than anything to do with mortgages. When an essential good's (housing) demand outstrips supply, all surplus goes to $0 to reach the clearing price for that supply.
Ex: In SF there were a lot of good big tech jobs paying $200k-$1m / yr. A vast majority of those wage increases accrued into the hands of landlords. Mortgages allow buyers to borrow against projected future earnings, allowing each buyer an affordable price compared to one who doesn't mortgage, but when everyone does it the benefits get nullified.
- s1artibartfast 4y agoThe benefits aren't nullified. As a result you have more homeowners and fewer people paying rent. This is the desired outcome.
- treis 4y agoBut that's because SF broke their real estate market. In a more functional one the cheap money flows to builders as well and they then build more houses bringing prices down.