Re:TED and inequality: The real story
by dmpk2k on Friday May 18, 2012 @08:12PM
(#3994681)
> it makes it possible for a family which can't quite make the up-front cost for a home to still buy a home
But does it actually have that effect? Once everyone is using mortgages, everyone is back in the same place as before mortgages.
To put it more concretely: before mortgages, houses might average around $100K because the average person simply cannot afford any higher. Once mortgages arrive, houses might spike to $300K, because your average person can afford that mortgage. So while the example family might not have been able to afford the $100K house because they had $80K, a mortgage won't help because now houses are around $300K.
So I don't quite grasp how this would affect rents. That seems to be an orthogonal issue.
But does it actually have that effect? Once everyone is using mortgages, everyone is back in the same place as before mortgages.
To put it more concretely: before mortgages, houses might average around $100K because the average person simply cannot afford any higher. Once mortgages arrive, houses might spike to $300K, because your average person can afford that mortgage. So while the example family might not have been able to afford the $100K house because they had $80K, a mortgage won't help because now houses are around $300K.
So I don't quite grasp how this would affect rents. That seems to be an orthogonal issue.