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The straw that stirs the drink in the US is mortgages.  With a few exceptions (locations mortals can't afford to buy under any circumstances), price fluctuations are dictated by availability of financing.  Cheap financing, real estate goes up.  Truer with residential than commercial at least initially (residential borrowers are more rate-dependent, and residential lenders have more tax and regulation breaks than commercial), but as a real estate booms proceeds, commercial speculation increases, and the flips get quicker.  In the end, the return period for both residential and commercial shortens dramatically, and on the residential side, mortgage interest is the biggest tax break you can have, so it has a built-in return.
by rifek on Mon Mar 14th, 2016 at 04:22:16 PM EST
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