Subnostr

It's a symptom of the current banking system. Things for which loans are made (homes, autos, schooling, etc.) are artificially price-hiked.

The interest is lower and payback is slower in a fractional reserve paradigm, but people afford payments not interest rates. This causes the total price to go way up, but the monthly remains what they might afford. Later, after turning homes into business investments and boostingthe prices, the down payment just becomes too much. Even the advent of the 3.5% down causes the total to rise for the same reason.

Fractional reserve isn't possible with hard money, so bitcoin will also fix housing costs.

MichaelJ 2y ago

That makes sense.

Though I'm not sure the subdivision homes being built are artificially price-hiked, entirely. They're just built as homes for families with 2 or 3 kids, 2 cars, and a dog. A family in their 20s just starting out is straight outta luck, because no one is building modest-sized homes for them. If they were, those homes would probably be at least somewhat more affordable than what is on the current market.

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James A Lewis 2y ago

I think that is also a subsequent symptom. Twenty-something newlyweds are less likely to afford the down, so the demand feels to the markets artificially low. This causes a new-build supply correction. No one makes modestly sized housing because the money is in mid-sized single family homes, multi-plexes, or apartments. Maximize the size of home you can fun on a lot, and your lot ROI is better as a housing developer. Too small and you'd be better to double up on a lot and make a duplex or quadplex.

If you want a modest house, you'd be best off with a trailer and a little land in the country. Plus, with remote work being what it is nowadays, that's really a great option.