Real estate, the most widely owned and highly leveraged asset class globally, has historically led the deepest economic downturns. Has a housing bubble ever burst without devastating pain across the economy and society? Unfortunately, not. It is far better not to pump real estate bubbles with government incentives and excessive monetary stimulants in the first place.
New Zealand is in a recession, and home values are more than 17 percent lower than the post-COVID peak. In Ireland, a massive house price surge and crash in the 2000s saw house prices in Dublin more than half.
So, does Australia need a crash, and what would that mean for all of us?
Some economists think recessions are needed occasionally to reset the economy. In this episode ABC business editor Michael Janda explains how a shock wave would ripple through the economy if the housing bubble bursts. Here is a direct audio link.
This is happening not just in New Zealand, China and Canada; despite best efforts to extend and pretend, price discovery is also spreading through many US housing markets. See WSJ’s Biden’s Mortgage “Relief” fuels higher housing prices. Reventure’s Nick Gerli reviews the details in the video below.
The US government is currently stopping over 1,000,000 defaulted mortgages from going to foreclosure under the FHA mortgage program. The result is another Subprime Housing Bubble, one that could cause huge declines in home prices around the US if it’s allowed to burst. Access housing data on Reventure App to track inventory and forecasts: www.reventure.app The WSJ just broke a story uncovering how the Biden administration continued to offer mortgage relief to defaulted homeowners well after the pandemic was over. Right now there are over 300,000 seriously delinquent mortgages being blocked from foreclosure by these regulations in 2025. Here is a direct video link.
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