<Is that really a good tradeoff? >
I guess, as usual, I'm confused about this (your?) New Economy mentality. I thought the idea of monetary policy was to provide ways of financing the items our economy needs, not just build empty new houses, drive up to the sky the prices of the input goods used for housing, and empty out apartment and rental housing (*). There's no free ride with this ultra low interest rate nonsense. If we don't need new houses, then yes, there needs to be a contraction, and call me crazy if you must.
I used to own several large apartment buildings, and was just speaking with one of my comrades in that business. He tells me vacancy rates (in old Tacoma) are running 15%, the highest he's seen in twenty five years in the business. He attributes it to 1. poor economy for wage earners. 2. everybody with a heart beat has already bought housing, so fewer bodies to rent (and apparently to buy, given the increase in new house inventory for sale). Here's the "residential rental vacancy rate" now, courtesy of Hoisington, see page 21. If it doesn't come up, the answer is 10%, highest level of the past half century.:
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