From 1997 to 2004 we cashed in more than $3.5 trillion in capital gains. This is more than the previous 20 years combined. In terms of numbers, our population is also growing rapidly. Also and to your point, lower interest rates has allowed more renters to become owners and new technologies have reduced the cost of obtaining a mortgage and standardized a set of lending guidelines that has allowed for a more precise measurement of a borrower’s credit risk.
I also think the fact that many new kinds of mortgages have become available has helped demand. The secondary mortgage market has grown and matured so that many kinds of mortgages can now be packaged and sold as mortgage-backed securities. The mortgage market has also become more specialized, as firms concentrate on different pieces of the market, including origination, servicing and securitization.
All these things have played a role in increasing demand. The rapid rise in home values has been limited to specific regions and is in no way being experienced by the entire country. Many areas continue to see average increases that are unremarkable. This shows that demand for housing is based on geographic desirability which is also an important consideration.
You are obviously very well informed. Thanks for the info.!