So credit is a financial transaction without relying on money, or you can view it as creating money, as I describe in my post Solving the Credit Problem. If you accept someone's word, or some other promise to pay money, you
To understand how time value works, it helps to remove time from the picture. Let's say you are playing settlers of Catan, or some such game, and there are 2 countries on different islands. One country has a lot of wood, and the other has a lot of ore. Each country has a shortage of the other resource. The country with a wood surplus will offer a low price for wood.
The issue with pricing goods across time, is to imagine the times as different countries. Will this resource become more or less abundant in the future? You also have to consider the fact that populations are growing. If the answer is less, then
Housing markets are priced in such a way so that the people providing services can make a decent profit, while not taking too big a chunk of the sticker price. If their profits are too small, they will conspire to get housing prices valued higher. Note that this is not really a function of the costs they incur, because it really is a controlled market. Many professionals who work in these markets are not really doing any work, or a very small amount of work, it's just something they control to make money from it. Their job is not to provide a good or service, but to control the good or service.
So housing equity gets pushed up so that these market players can take home bigger profits, and the home purchaser doesn't feel like they are getting ripped off. All other markets prices have become more commoditized and competitive. But housing markets are anti-competitive. This has nothing to do with a land value tax or any other such bullshit. It's all a function of money lending, or credit systems being broken and grossly inefficient. And then that bullshit spreads to the associated industries. How much you make is poorly correlated with how much value you deliver.
Most other markets strive for better quality and efficiency, but housing markets work through the promise of equity to a home owner. The homeowner, wants equity because it is better than paying rent, where you get no equity. So homeowners essentially buy the time value of their houses for the cost of maintenance plus interest only. The equity value is subtracted from what the homeowner is willing to pay. The market wants to be continually and artificially inflating prices, because any price inflation just means people are willing to pay more in interest and other costs. It is the essence of a pyramid scheme, simply based on the fact that there is not of a market for buying homes without credit, and our economic and financial systems are intentionally designed AGAINST creating credit efficiently. Just like any price markup you get at the grocery store, is a measure of the costs and inefficiencies of deliverying the product to you, the price markup on credit transactions, is simply a measure of the TOTAL inefficiency to deliver the product to you.
If we look at nature, bees make their honeycombs out of honey. It actually takes 6-8 pounds of honey, to make 1 pound of wax. So in that case, storing value is only about 12% efficient. 90% of the value goes into the storage mechanism, which can't be recovered.
While human interest does significantly better, in that people typically pay $2 for every $1 of house, there's really no functional reason for that, in the way that honeycomb serves a functional purpose. The cost of a loan should be:
principle + bookkeeping costs + (recovery cost)*(default chance) + (insurance) + markup(bad)
Nowhere should time value come into this, because time value is lost when you fail to extend credit. The idea that money naturally grows is a myth.
Generally, one would expect wealth and populations to grow in roughly proportional amounts, with perhaps a slightly faster growth rate for wealth. So maybe because wealth is more abundant in the future, it makes sense to pay back a little bit more. But the actual truth of the matter is, all money is a form of credit, and money inflates, it doesn't deflate, so credit can work as efficiently as money, and it can inflate, or offer negative returns too. You increse wealth by creating more financial assets, NOT through the growth of the financial assets which exist. Free interest, or "Growing Money" is actually nothing more than an incentive to NOT produce, to capture markets and not generate output. Do not trust any money that multiplies on its own. It is a lie.