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.