Part 10/16:
Back then, the crisis was triggered by risky loans—like the ninja, no-income, no-asset loans—and a cascade of foreclosures. Today, the majority of buyers use fixed-rate mortgages, and lending standards are stricter. Moreover, foreclosure moratoriums and loan modifications prevent a flood of distressed sales.
However, rising home prices without corresponding income growth may lead to an affordability squeeze, potentially cooling demand and causing a correction.
The Role of Government and Market Interventions
Several recent policies could influence the market: