A 26-year-old MIT graduate is turning heads over his theory that income inequality is actually…
Greg Ferenstein
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Financing, as much as markets, drive housing costs as fewer workers qualify for loans. Even existing housing prices are tied to new home construction and builders will adjust their offerings to appeal to the income demographics the banks prefer. As banks tighten lending houses get bigger and the average size/price of homes sold goes up.

The supply of homes available for sale is higher now than it’s been since the fifties boom nationwide but the supply hasn’t driven prices down because the pop of the housing bubble drove lenders toward extreme qualification criteria. We could give every homeless family a house from the existing available inventory but the credit/money isn’t available to get them onto the bottom of the housing ladder.

I believe that the mismatch between supply and demand in housing is purposeful as the Fed and banks are concerned about rights to title of many homes sold or refinanced during the mortgage bundle boom. Unless you’ve done a thorough title search on your home since 2010 you can’t know for sure that your deed and title aren’t sitting in some untraceable lock box in Dubai. You may be making payments to a lender of record that has no legal collateral position in your home.

Since home/land values are very instrumental in establishing good faith in the currency sorting out the many properties with gaps in title histories is best done a house at a time as they come on the market and any legislation addressing the issue would only shine a spotlight on the problem, so credit will remain tight for a while longer and greatly favor the larger new homes and those with existing loans that predate the bubble.

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