Housing? Yep mortgages, people can rarely afford a house without a large mortgage
Cars? Yep, most cars are bought on finance, people couldn’t buy new cars without the finance.
Health? In the us, insurance companies provide the finance.
I really wish society would have stopped this in its tracks.
Private equity, sure, but also the inflated cost of construction materials, realtor and land lord collusion, automated rent fixing, incentives for landlords to keep empty units rather than budge on rent.
It’s a big mess
I know lots of people who would be dead without medical care.
Instead they are making lots of doctors appointments, and buying lots of drugs.
Bad example, mortgages keep jumping because property values keep increasing. Property values keep increasing because demand is exceeding supply. As more people can access mortgages due to lower rates, the demand shoots up and so does the property value which leads to a race to the top (bottom). Lol
>Cars? Yep, most cars are bought on finance, people couldn’t buy new cars without the finance.
Yea here we don't have a real lack of car supply. People are financing based on _wants_ rather than needs.
Not quite. Property values keep increasing because the monetary supply keeps increasing, one effect of which is that large property owners can corner markets by buying up properties and warehousing them until they see the prices they want to sell for. This appears as a lack of supply (not enough houses) when it's really a lack of market forces forcing sales (not enough houses on the market). The remedies to these two situations are very different.
What credit do insurance companies provide? You pay them and they pay the doctor based on some negotiated rate. They don't front you the money and you have to pay them back.
What are you talking about?
But the immediate illiterate defenses in the short time this comment has been posted are wild, if sadly expected.
Yes, for the love of all that's holy: private equity has fucked up housing across the planet. Learn about it a little before insisting otherwise!
This isn't simple supply and demand, nor is it all a big mystery. It's certainly not a 'bad example' of the finance industry fucking up a life essential to profit off it at our expense; it's a core, fundamental example.
People have done huge amounts of work exposing these shenanigans. All the information needed to educate yourselves is a few clicks away. Here's some titles to get you started:
"Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream" by Aaron Glantz
"Private Equity at Work: When Wall Street Manages Main Street" by Eileen Appelbaum and Rosemary Batt
"The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It" by Richard Florida
Stop letting the industry off the hook for the unimaginable damage they've inflicted on the heart of society. Step one: gtfo out of denial.
The New Commanding Heights are education and health care, which are rapidly expanding sectors where credentials and regulation are important sources of rents.
http://www.arnoldkling.com/blog/klassic-klingisms/
In Marxian economics, the "commanding heights of the economy" are certain strategically important economic sectors.
https://en.wikipedia.org/wiki/Commanding_heights_of_the_econ...
What does this mean? Are you saying mortgages are recent? Prices are a function of supply and demand, not of access to capital.
> I really wish society would have stopped this in its tracks
People didn't own houses before. They were serfs or renters. Mortgages meant people could access a lifetime of money now and afford a house.
Demand for living and having somewhere to live are inelastic. As a result, these markets are especially prone to distortionary effects caused by monopolies, price fixing, and price non-transparency.
I think I get what you mean with this, but I'm not sure I follow it completely.
Banks are able to extend large amounts of credit that are backed by a small percentage of the credit offered. People are generally bad with money and will take what the bank offers them if they think they can afford the monthly figure. The bank and it's lending practices therefore seem to have an (indirect?) influence on how much money someone has to pay for a house, and therefore what houses sell for in the market. Whether all this does is reveal a houses true value in the market, as opposed to artificially increasing it, I'm not sure.
It seems like it's possible for a banks mortgage lending practices to both positively increase access to mortgages while at the same time making houses more expensive. At first I think this is counter intuitive, but I think there's a logic to it. Whether this is a good tradeoff, is separate to whether the loaning itself increases house prices.
If a buyer cannot access capital (money), then no amount of demand will facilitate the exchange and the seller might supply a different buyer who has capital for a lower price.
If the mortgage were to suddenly disappear I would expect the housing market to have a similar contraction as in the recent recession when poorly understood risks from mortgage backed securities caused a decrease in mortgage availability.
And easy access to debt massively shifts the equilibrium point on the supply/demand curves.
Cars, houses, college, even cell phones or furniture can have far higher market prices when people switch from paying full-price in cash at time of purchase to making payments over months or years.
That is simply wrong.
The demand curve is the relationship between quantity bought and price. It definitely shifts with how much money people have, so in the case of houses depends entirely on access to capital.
Access to capital influences how much money can be spent to satisfy a demand.