Epistemic Status: haven't worked through all the consequences here.

There's currently a big brouhaha going on in the interwebs about Trump's plan to allow 50 year mortgages.

Supporters claim that it'll help people buy homes.

Detractors point out that a 50 year mortgage doesn't actually reduce monthly payments that much compared to a 30 year one (because most of your payment at current rates is interest), and that insofar as it does, that just pushes house prices up since housing supply is mostly fixed in the short term (and long term is constrained more by regulation than the market).

Focusing on the second argument, the logical conclusion here is to ban mortgages entirely, since all making it easier to buy houses does is subsidise demand.

But that doesn't work either. Housing takes a certain amount to build, and if people can't afford that without mortgages, that's going to dry up or reduce new supply of houses.

It seems like the obvious solution is to allow getting a mortgage on the value of the house (even with no downpayment, even amortization free), but to require full payment on the value of the land. The value of the house, excluding the land, will be assessed using standard techniques as part of requesting a mortgage.

The effect is that houses in sought after areas become unaffordable, pulling down prices. Houses in rural areas become more easily affordable. Since supply of both is mostly fixed in the short term, the same number of houses end up changing hands in both areas, but urban buyers are saddled with less debt and rural buyers with more. However this all but guarantees that house prices in every area will be high enough to pay for new building.