More color on the inevitable rent boom of the 2010s.
kevinerdmann.substack.com
Here I want to build on the post about mortgage affordability vs. rent affordability, on the point that the clampdown on mortgage lending in 2008 necessarily led to unprecedented rent inflation. Skeptics and opponents of federal mortgage agencies and the Fed attribute high home prices to low interest rates and mortgage access. I agree that a lower discount rate could raise the price/rent ratio, though I don’t think this is particularly important compared to other factors in housing economics. But, where the market is allowed to operate, the cost of new homes will be generally anchored to the cost of construction. If price is fixed by the cost of construction, and the price/rent ratio increases, then lower interest rates and more access to credit should lower
More color on the inevitable rent boom of the 2010s.
More color on the inevitable rent boom of the…
More color on the inevitable rent boom of the 2010s.
Here I want to build on the post about mortgage affordability vs. rent affordability, on the point that the clampdown on mortgage lending in 2008 necessarily led to unprecedented rent inflation. Skeptics and opponents of federal mortgage agencies and the Fed attribute high home prices to low interest rates and mortgage access. I agree that a lower discount rate could raise the price/rent ratio, though I don’t think this is particularly important compared to other factors in housing economics. But, where the market is allowed to operate, the cost of new homes will be generally anchored to the cost of construction. If price is fixed by the cost of construction, and the price/rent ratio increases, then lower interest rates and more access to credit should lower