Credit has largely been the best thing to happen in the world. But lower interest rates have not made housing more affordable. Neither have longer terms. Both of these things, in the long run, just make build-able land more expensive -- which keeps the mortgage payment / income ratio pretty constant in the long run.
Obviously Real Estate is highly cyclical. So you can look at any two points in time and make conclusions like low interest rates or longer terms are great for affordability. But if you look over the long run, it's just not the case.
Land price is a function of interest rates, taxes, lending standards, purchasing power, and speculation -- there are no inputs like with a refrigerator. And land is not a commodity in the same vein as, say, corn. If the demand for corn goes up, people grow more corn. If the demand for land goes up, VERY RARELY do we make more land.
Obviously Real Estate is highly cyclical. So you can look at any two points in time and make conclusions like low interest rates or longer terms are great for affordability. But if you look over the long run, it's just not the case.
Land price is a function of interest rates, taxes, lending standards, purchasing power, and speculation -- there are no inputs like with a refrigerator. And land is not a commodity in the same vein as, say, corn. If the demand for corn goes up, people grow more corn. If the demand for land goes up, VERY RARELY do we make more land.