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Comment by TheSpiceIsLife | Hacker News Reader

Lending money out at unreasonably high interest rates.

Which makes 7% usury.

Mortgage interest rates have been far, far higher than 7% in the past.

In 1981, the average mortgage rate hit 16.63%. The rates were higher than 7% all through the '70s, '80s, and most of the '90s, not dropping below 7% until 1998.

I know, I was there.

My first job back then paid $4.75 an hour, and I bought my first home for $37,500.

So go on, keep fucking telling me things were harder back then.

Nobody is saying things were harder they’re saying interest rates aren’t the problem. Note the principal on your first home.

It’s definitely the interest rates in combination with incessant printing into inflation.

How do you think the principal got higher, magic?

By not building homes at anywhere close to the rate of population growth. It's so obvious by looking at the data you'd be gobsmacked anyone is talking about anything else before simply building more houses. Eliminate most zoning, bring in labor from outside the country, train up domestic labor, create incentives for construction and construction tech, so on and so forth.

There simply aren't houses.

Inflation doesn't help, but housing prices have risen way faster than the rate of inflation. So again: find the actual problem and solve it.

Why do you think neighborhoods with single family homes that have insanely high appreciation don’t want new houses built?

Because it’s their only high growth asset, and their largest.

How did it get that way?

You can go step by step through this process of root cause analysis and see that it is because our money is weak.

7% is not unreasonable by any stretch of the imagination.

Do the math and tell us the income you'd need for a $1,000,000 house at prime.

It's unreasonable. Pay a loan to term one of these days and you'll see why.

Don't buy the $1,000,000 house if you think it's too expensive.

It's only (over)priced that way because rates were low and prices haven't adjusted to current rates yet.

I don't think those are the only reasons house prices are high now.

Why don't you try telling the whole truth.

House prices are high because governments are printing money like mad.

You're right I shouldn't have said "only", but in my opinion it's the main reason. And of course there are several reasons rates move.

When rates were around 3% not so long ago, the monthly payment on a $1M loan was around $4k. Now at current rates the monthly payment is closer to $7k. As a buyer, that's pretty hard to shrug off. It ends up eliminating entire classes of buyers just like it added them when rates were going down.

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