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[quote=Anonymous][quote=Anonymous][quote=Anonymous]So we have hit a couple of spaces on NIMBY bingo.

1. Don't add housing in my rich neighborhood, go gentrify somewhere east of the river, or else you are racist

2. Supply and demand don't apply to housing

3.  When you say that adding housing supply is good, you are just like supply siders under Reagan, so I don't have to listen to you

But "its all about the Fed" is a new one.  [/quote]

Only on DCUM would people act like the Fed is no big deal. The Federal Reserve is the most important player in the entire economy. People in the housing industry watch the Fed like a hawk because interest rates have such a profound effect on housing prices. Don't believe me? Go to a mortgage calculator, and mess around with the interest rate feature. If interest rates go to 6.5 percent, which, historically, is a pretty normal rate, your monthly mortgage payment would be roughly double what it is today. You don't think doubling someone's monthly mortgage bill might have an effect on prices?  [/quote]

Because we are not discussing national average housing prices, or year to year spikes and declines, but long term trends that make well located (esp transit served) places near the centers of strong metro areas particularly expensive.    The interest rate is the same for Dupont Circle and Suitland, for Silicon Valley and Toledo.    It CANNOT explain the differences among those markets - either the differences at one point in time, and the differences over time.

And of course it cannot explain the differences in equilibrium rents.  
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