Housing is different than other kinds of assets because it is also essential for nearly everyone to have a home. Most people in the market for a home only have their paychecks and credit from the bank. Median wages are quite a bit lower than FANG salaries and banks only give credit to people with appropriate incomes buying appropriately priced homes. Governments also need to keep people in housing and voters will kick out any government that fails too hard at that.
So unlike bitcoin, housing cannot stay irrational and divorced from fundamentals forever. Real people need to use real paychecks and actual local credit unions need to look at those purchases and see a safe bet.
If that system stays out of whack for too long, everything collapses, the banks’ business model, the housing market’s prices, the ruling party’s majority, rule of law as the people resort to squatting and the capitalist system that failed in the simple task of keeping people out of the rain and cold.
So unlike bitcoin, housing cannot stay irrational and divorced from fundamentals forever. Real people need to use real paychecks and actual local credit unions need to look at those purchases and see a safe bet.
If that system stays out of whack for too long, everything collapses, the banks’ business model, the housing market’s prices, the ruling party’s majority, rule of law as the people resort to squatting and the capitalist system that failed in the simple task of keeping people out of the rain and cold.
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