Could there be a housing market crash coming in America? That was the question posed Tuesday by The New York Times Magazine, which asked eight experts what their biggest fears were for housing.
To get answers, John Cassidy, a senior editor at The New York Times Magazine, interviewed them: scholars, professors, bankers, brokers, analysts and even law professors.
If a housing crash were to occur, Americans would surely be on the hook for the losses.
Here’s what the experts had to say:
“A housing crisis is like putting a modern-day magnifying glass on an 18th-century bank system, where a bank secretary in Philadelphia could make money selling mortgages to small New York City savings banks in which the big banks didn’t have a toehold,” [Harvard economist George] Akerlof said. “The modern era starts with the 2008 crisis and never ends.”
“Think of it as house of cards,” Jeffery Frankel, a professor of finance at Harvard University, told Cassidy. “You get all these loans made and then there’s a big loss when the houses don’t sell. All you do is keep on making the loans.”