how did the housing market get so inflated, and is it different from what happened in 2008?
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2008 was a crisis of what’s known as subprime mortgages. Essentially, banks gave loans to people who weren’t the best at paying them off, hence the term “subprime”. Why? Banks didn’t care about those loans, they bundled them up and sold these loans off to other people. That’s what incentivized banks to even give out these subprime mortgages in the first place.
Normally, banks only give loans out to people good at paying them back. Now that there’s more people that banks can give loans to, there’s more people that can “afford” to buy a house (hint: they actually can’t, they’re living beyond their means). This new influx of buyers drives house prices up. It’s key to remember here that this increase in house prices is not sustainable. This is called a bubble, a term that was thrown around a ton on the news and in economic circles. What do bubbles do? They pop, and this housing bubble in 2008 popped *bigly*. The ripple effects extended across the world, and caused an economic depression.
What’s different now is that the “people” buying up these houses have money. I put people in quotation marks because they often aren’t, rather, they are corporations or massive landowners with huge amounts of money to spare. Regular people simply cannot keep up, as they get outbid for houses that are not worth the amount of money that the big fish can slap down. This is the key difference. The 2008 bubble was caused by more people entering the market, this recent increase in house prices is caused by more money entering the market.
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