The Bubble in Housing

The bubble in housing prices went so much further than anything in history because it wasn’t real — it was fraud all the way through with Wall Street pumping money into an already bloated system and putting pressure on mortgage and real estate brokers, and with the complicity of developers, to inflate housing prices over broad swaths of the market. None of it was real. Comparing the prices to the traditional index of median income, housing prices simply disconnected from the rest of the economy and went where Wall Street needed them to be.
Now, because the securitization scheme was an illusion (no transfers actually made), and the courts allowing millions of foreclosures that are equally false and fraudulent, we have a fake inventory of houses for sale that exceeds anything in history. And it will only get worse unless everyone starts to wake up and people stop walking away from homes that were the basis of a fraudulent sale of loan products that were not loans at all — they were part of an essential scheme of issuance of securities by homeowners who didn’t have any idea that the essence of the their “loan transaction” was securities fraud.