…how did a $217,000 dollar condo become $1,000,000?
Two reasons:
1) Securitization of loans allowed lenders to pass off mortgage risk to 3rd parties rather than holding it themselves. They only have to hold the loans long enough to fob them off on the next sucker, so why bother making sure that the borrower is good for the money? And of course they pushed the ARM products so that initial payments were low. This allowed a much larger pool of buyers to enter the market than would normally be possible. Supply held constant, this pushed prices way up.
2) Inflation. How did a gallon of milk become $5? How did your dollar go from being worth 1.25 euros 8 years ago to being only worth .7 today?
