What has been a consequence of allowing commercial banks to create new money for real estate investment?

Allowing commercial banks to create new money for real estate investment generally leads to increased demand for housing, which is reflected in the shifting of the demand curve to the right. When banks provide more loans, it makes it easier for individuals and businesses to invest in real estate. With an increased supply of credit, more prospective buyers enter the market, elevating the overall demand for housing.

This increased demand is particularly relevant in Hawaii, where limited land availability combined with an influx of investment can significantly impact housing markets. As more people seek to buy or invest in properties, this heightened demand typically drives up property prices and could lead to a competitive market environment.

Other options may not accurately reflect the dynamics of increased money supply in real estate. For example, a decrease in housing supply would not align with the effects of increased demand due to more available financing. Downward pressure on property values would also be contradictory in the face of increased demand resulting from softer credit conditions.