The Case Against 30-Year Mortgages

By all means I can imagine the 30-year fixed loan could be driving up prices of the land itself (the lots). There is of course a non-trivial cost for materials and labor, below which you would never expect see the price of a new home fall.

I suspect though, for better or worse, if we had to pay cash for a home, builders would simply be putting up inexpensive mobile-home style houses on tiny lots. Suburbia would look very different from what it looks like today.

It also seems likely that if the 30-Year Fixed went away, only the truly wealthy would be able to buy homes … to rent to the rest of us of course.

> It also seems likely that if the 30-Year Fixed went away, only the truly wealthy would be able to buy homes … to rent to the rest of us of course.

It’s kind of already been happening. Rising LTVs. A rising percentage of renters. All this means the wealthy own a larger share of housing. Rent and mortgage payments are two ways for those with substantial assets to parasitize cashflows from those without. The article wants to blame the pass through effect of subsidies (the way that each subsidized dollar partially cancels itself out by boosting price some amount between $0.01 and $1.00) but it ignores the elephant in the room of wealth inequality - the structural cause of housing scarcity.