Re:Finally, no bid on mortgage-backed securities
by andrewla on Monday June 13, 2022 @10:03AM
(#31725729)
> There is no reason to expect it to crash by that much in the next few years, if ever.
Was there a reason to expect it to happen in the first place? Aside from ex post facto reasoning?
Housing is a tough market to crash because people need to live somewhere, so if prices fall people just avoid moving, and liquidity drops. For prices to fall substantially requires that people express a liquidity preference -- they'd rather have the money, even discounted, then keep the house. And the primary way that happens is that people can no longer afford to service their mortgages.
This doesn't happen easily, but when it happens, things can break very dramatically.
Was there a reason to expect it to happen in the first place? Aside from ex post facto reasoning?
Housing is a tough market to crash because people need to live somewhere, so if prices fall people just avoid moving, and liquidity drops. For prices to fall substantially requires that people express a liquidity preference -- they'd rather have the money, even discounted, then keep the house. And the primary way that happens is that people can no longer afford to service their mortgages.
This doesn't happen easily, but when it happens, things can break very dramatically.