I think the issue has been worsened because it was easier, politically, to work around the problem by making mortgages more attainable rather than by doing something to decrease the value of the home.
In the short run, everybody is happy- developers make money and build houses, consumers and investors can borrow cheap money with little leverage to get a worthwhile asset, and existing homeowners see their house appreciate and can re-fi to take advantage of the cheap cash.
However, this strategy doesn’t scale. You can only make mortgages so attainable, before you get 2008 all over again.
I think inflation has been the answer- with massive inflation, we can decrease the real value of a house and make mortgates more expensive without people ending up underwater.
Of course, inflation has many of its own problems, like we’re seeing today
In the short run, everybody is happy- developers make money and build houses, consumers and investors can borrow cheap money with little leverage to get a worthwhile asset, and existing homeowners see their house appreciate and can re-fi to take advantage of the cheap cash.
However, this strategy doesn’t scale. You can only make mortgages so attainable, before you get 2008 all over again.
I think inflation has been the answer- with massive inflation, we can decrease the real value of a house and make mortgates more expensive without people ending up underwater.
Of course, inflation has many of its own problems, like we’re seeing today