Every recession looks like a housing bubble in retrospect.
People who had jobs and lose them suddenly can’t afford those homes, they were previously qualified for.
Equity loans on already owned homes? That’s not what Freddy and Fannie do, right?
The cost of housing was rapidly increasing before Covid, and would have continued (though likely at a somewhat lower rate) to rise without Covid. The cause, I would argue, is the rise of a class of destructively stupid people both on the streets and in certain State politics who are throwing a wrench in the works for everyone else and driving shifting of people.
Instead, here we find Freddy and Fannie coming along to again help people take on more new debt which will encourage churn, which will in turn only drive up prices all the more.
And here’s where the bubble comes into it because I would argue that most people invest behind the economic wave behind their justifications for investment, and that in many places they were already overbuilding before the problems with either lumber production or the ports. To enable the continued elevation of prices, which is what this change will do, will further drive a bubble by putting off any correction.
A recession, which is when people tend to pull back with their spending, should actually help to slow down some aspects of a bubble by at least removing some of them from the pool of investors in new construction.
So the trick is to generate some kind of unemployment supplemental insurance.
Right now, you’re not even allowed to transfer title unless you can show you have fire insurance on your home. It would be an insurance bonanza.