To get a little less abstract than the previous post on the application of housing law during financial meltdown, I think I've satisfactorily chewed over a connection I've been working on.

A week ago, I attended the Global Suburbs conference at UMich (in no small part masterminded by Dale), and caught part of a talk on land ownership and housing costs in Lahore, Pakistan. If I followed correctly, one comment that was made was that Pakistanis had fairly recently received access to financing tools such as the 30-year mortgage, allowing many people the potential to purchase homes who never would have been able to previously. This increased buying power led to increased demand, contributing to rising prices.

There's a parallel here. Over the past decade, Americans have received access to financing tools such as the ARM, the zero-down mortgage, the interest-only mortgage, the no-documentation mortgage, and all sorts of bizarre hybrids. All of these were essentially justified by lenders on the grounds that mortgages were a can't-lose proposition, as well as the adoption of collateralized debt instruments, and allowed many people the potential to purchase homes who never would have been able to previously.