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The ability to get a loan for some % of income over 30 years also props up housing prices. If the standard mortgage term were shorter, housing prices would argu
by nanidin 4y ago
The ability to get a loan for some % of income over 30 years also props up housing prices. If the standard mortgage term were shorter, housing prices would arguably have less upwards pressure (but this might make it harder for lower income participants to compete with higher wealth participants.)
- onlyrealcuzzo 4y agoThis is mostly only true in cities where lot prices are super high - which actually isn't the case in the majority of US cities. It's hard to imagine commodities being substantially cheaper if we didn't have 30-year mortgages. Home builder margins aren't impressive. The cost of a new home is pretty much the cost of the lot, plus the cost to build it, plus a 10-20% margin. That margin isn't going down a lot, even if you don't have 30-year mortgages. All that's happening is that the size of US homes would be much, much smaller. And you might have some pressure for smaller lot sizes in places like SoCal and NorCal and Seattle.