> Housing is overpriced because anyone can go to a bank and get as much cash as the house is appraised for, which is circular.
The appraised value is just a signal how much collateral a bank can rely on for the loan, which is why most loans with good interest rates have a maximum loan to value ratio. Banks don't want to own houses, they want to own a piece of the borrower's future productivity, manifested as interest payments.
The limited housing/transit supply (due to zoning restrictions) coupled with concentrated job growth are what drives up housing costs.
I did go on to acknowledge the "underlying supply problem". But this thread is about financials, and without the endless supply of money, asset valuations would be much lower.
The appraised value is just a signal how much collateral a bank can rely on for the loan, which is why most loans with good interest rates have a maximum loan to value ratio. Banks don't want to own houses, they want to own a piece of the borrower's future productivity, manifested as interest payments.
The limited housing/transit supply (due to zoning restrictions) coupled with concentrated job growth are what drives up housing costs.