Comment on Housing prices
dejected_warp_core@lemmy.world 1 week agoThe finance side of things has also enabled a kind of house size inflation. Anecdotally, I’ve seen new tract housing go up in areas that need housing, which were all 3000 sq/ft each. They could have developed for higher density and sell more units, but I guess the margins are better on houses that sell for 700k and up. Especially if folks are willing to go into deep debt to pull it off. Plus that does little to ease demand, so the cycle can continue.
TheOubliette@lemmy.ml 1 week ago
Real estate development tends to be done on loan. Before the decision to buildi a house is made, it is pitched to the lenders. The lenders also lended mortgages for other houses in the area and own a few, they want values to go up. The lenders approve the more expensive developments expected to increase real estate prices, not the lower income housing. The lenders can always choose a different developer to give the money to, the one that will pitch the higher perceived value development.