Real estate - what the banks build their housing bubbles on

I found this description of real estate in a piece by Michael Hudson, who was in turn writing about the forgotten work of Thorstein Veblen who wrote in the late 19th and early 20th Century. The context is the United States and the growth of small towns, but who cares, the story is the same wherever in New Zealand now! Our housing bubbles are built upon the same naked search for something for nothing, what's called 'rents' and 'rent seeking' in economics. What the banks do is just spray financial petrol - credit - upon whatever real estate embers are already smoking.
 Veblen’s Institutionalist Elaboration of Rent Theory - Michael Hudson.

"As the economy’s largest asset, real estate was the great popular arena in which to seek speculative gains. Nowhere was this more visible than in small towns, which Veblen found to have had “a greater part than any other in shaping public sentiment and giving character to American culture.” The country town was basically a project to puff up real estate prices.

Its name may be Spoon River or Gopher Prairie, or it may be Emporia or Centralia or Columbia. The pattern is substantially the same, and is repeated several thousand times with a faithful perfection which argues that there is no help for it …

The location of any given town has commonly been determined by collusion between ‘interested parties’ with a view to speculation in real estate, and it continues through its life-history (hitherto) to be managed as a real estate ‘proposition.’ Its municipal affairs, its civic pride, its community interest, converge upon its real-estate values, which are invariably of a speculative character, and which all its loyal citizens are intent on ‘booming’ and ‘boosting,’ – that is to say, lifting still farther off the level of actual ground-values as measured by the uses to which the ground is turned. Seldom do the current (speculative) values of the town’s real estate exceed the use-value of it by less than 100 per cent.; and never do they exceed the actual values by less than 200 per cent., as shown by the estimates of the tax assessor; nor do the loyal citizens ever cease their endeavours to lift the speculative values to something still farther out of touch with the material facts. A country town which does not answer to these specifications is ‘a dead one,’ one that has failed to ‘make good,’ and need not be counted with, except as a warning to the unwary ‘boomer.’

Describing real estate as being “the great American game,” Veblen focused on how future prices were enhanced over present values by advertising and promotion. “Real estate is an enterprise in ‘futures,’ designed to get something for nothing from the unwary, of whom it is believed by experienced persons that ‘there is one born every minute.’” Farmers and other rural families from the surrounding lands look “forward to the time when the community’s advancing needs will enable them to realise on the inflated values of their real estate,” that is, find a sucker “to take them at their word and become their debtors in the amount which they say their real estate is worth.” The entire operation, from individual properties to the town as a whole, is “an enterprise in salesmanship,” with collusion being the rule."