Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[lio45]

It’s pretty simple: how high people can bid up rents and monthly mortgage payments is directly linked to both 1) people’s ability to pay and 2) supply vs demand. (And then, monthly mortgage payments being “fixed” by supply and demand, house prices are directly linked to interest rates.)

The behavior is fairly simple because housing is a pretty damn essential “purchase”. It’s like selling a bottle of water to someone stranded in the desert and about to die of thirst: no need for deep historical water market trends analysis to declare that what that person will be willing to pay is “all his $$$, whatever that is”. Very simple situation.