California’s latest homebuying debacle is a pumped-up storyline we’ve seen before – even if each housing bubble has its own shape and size.
California housing has never been cheap and buyers must heavily rely on generous financing. And if the market looked bubbly – when values exceed economic logic – there’s usually an aggressive monetary benefactor helping to overinflate it.
This tenuous relationship with mortgage money also creates volatility. When that monetary pump disappears, bubbles burst and the market takes an ugly reset.
The latest example comes courtesy of the Federal Reserve, which morphed from benefactor (the creator of historically cheap mortgages) to the villain (an economy-icing hiker of