Comment by h14h
1 day ago
Given how inexorably tied the US economy is to SFH prices, a drop may do more harm than good.
Many families have the majority of their wealth tied up in their home, and another significant portion of it (knowingly or not) in the SFH MBS market via their retirement investments. If prices fall quickly enough to impact the MBS market, a large number of households could suddenly see big dips their two biggest sources of wealth.
A gradual drop may be fine, but the financialization of housing at the national is a big mess. Sadly it makes the market dynamics of giving people places to live way more complex than it should be.
You don't even need a drop; you just need prices to stay stable for a decade or so, and inflation will "drop" the real cost of new ownership.