I was reading an article that housing became ridiculously expensive just before the Great Depression due to easy loan approvals.
Many youngsters refuse to live where they can afford to buy property and then moan about the old folks causing their hardship.
I don't believe franking credits existed in those days.
And we think of mortgage-backed securities as a new innovation. But it may surprise you to know, the same thing went on during the 1920s.
The mainstream view is that the Great Depression was brought about by a stock market bubble. However, much less is written about the real estate bubble of the 1920s.
When things got back to normal after the First World War, mass production of the motor car got into full swing. The auto got cheaper every year. Suddenly it was opening up vast suburban and rural areas to housing.
The land speculation was massive.
Developers were quick to move on the rising land values. Banks likewise chimed in right on cue, with ever looser lending. They were called ‘shoestring mortgages’ back then. But they weren’t a lot different to the subprime mortgages of the 2000s.
Land around major cities sold like hotcakes. Between 1918 and 1926, house values rose by more than 400%. That’s the figure for around the nation. But it hides the full story. Land price in certain states and cities, went much higher than that. Most notably in Florida.
Between 1919 and 1925, the average value of a building permit in Miami grew from $89,000 to $7,993,500. Do the maths, that’s a rise of 8,881% in only six years.
But it wasn’t just residential housing that surged. Commercial real estate also boomed.
Now instead of whinging about claiming that no other generation had to go thru this abnormal spike in property prices just accept and deal with it.
