real estate is a great asset because banks lend ≈75% of its value

real estate is a great asset because banks lend ≈75% of its value so if your property is worth $100K, you can borrow $75K against it at a low rate the immovable property is used as collateral

≈80% of lending in financial markets is collateral-based financial institutions use government bonds as collateral for short-term loans you're using immovable property as collateral for a generally longer term-loan

collateralized lending comes with smaller interest rates/financing cost because it's low risk for the lender if you default - the lender keeps your collateral haircuts and spread are set sufficiently high to cover liquidity, term and market risks

this is why a 7 day Treasury bill-backed repo agreement may have 2% haircut and a 0.1% spread, while a 20 year immovable property collateralized loan a 25% haircut and a 2% spread the T-bill is more liquid, less volatile and the loan term is much shorter

so by using real estate as collateral you're just tapping into the existing low interest liquidity/credit line at the same time the property earns a yield (e.g. via rents) and generally appreciates

as the immovable property appreciates, so do your assets and financing capacity. with a more valuable collateral asset - the bank will give a larger loan increasing real estate purchase prices push rent prices up as well. so may increased interest rates, since it's harder to buy

given that housing is a core necessity for most combined with the willingness of banks to finance against immovable property creates a high persistent demand for real estate

this makes immovable property a good hedge against inflation and economic downturn price adjusts to value & while the composition of demand may change (e.g. shift towards smaller/cheaper units) - the demand for property will inherently remain high