Cycle on housing price

Income level of people in the Valley doesn't increase much last several years. But housing price keeps going up. A two bed room townhouse in good condition can easily cost half a million.

Those so-call creative mortgage, such as interest-only mortgage, helps to keep housing afforability. Everyone want to live in a better house. And most are willing to push the affordability limit to buy a better house. When people bid a house, some will calculate their affordability based on interests-only mortgage rate. This pushing up the bidding price. As a result, this become a cycle on housing price. With housing price rocket high, people can't afford to buy a decent house without using interest-only mortgage.

Sense a housing bubble blurts!? But it just doesn't happen ... ...

Housing article