The number of buyers able to obtain a loan increases if the home’s price is lower.
Increasing a home’s price reduces the number of potential buyers.
The reason to build a more expensive home is to be able to sell for a higher price. But if the population of buyers in a location cannot afford to pay more, then a builder would be stupid to build the most expensive home they can, because insufficient people will be able to afford it. Hence smaller (cheaper) homes get built in some places, and bigger homes in other places.
Increasing a home’s price reduces the number of potential buyers.
The reason to build a more expensive home is to be able to sell for a higher price. But if the population of buyers in a location cannot afford to pay more, then a builder would be stupid to build the most expensive home they can, because insufficient people will be able to afford it. Hence smaller (cheaper) homes get built in some places, and bigger homes in other places.