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Is real estate as an asset class “too big to fail”?

I think 2008 was the last time we will see adverse price discovery in the real estate market because banks, fanny/freddie and the fed need to cover their downside risk.

This is outlined in a Brookings paper called Quantitative easing and housing inflation post-COVID:

https://www.brookings.edu/articles/quantitative-easing-and-housing-inflation-post-covid/

The Fed’s quantitative easing (QE) resulted in the Fed buying nearly 90% of the increase in eligible mortgages from 2020 to 2022.

A massive increase in house prices coincided with the Fed’s QE, translating into higher housing inflation.

Housing was a key component of the post-COVID inflationary episode and kept overall inflation above the Fed’s 2% target.

The assumption that buying mortgages as part of QE has no relationship with house prices should be reconsidered for future monetary policy responses to recessions.

submitted by /u/External_Koala971
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source https://www.reddit.com/r/RealEstate/comments/1ov38ov/is_real_estate_as_an_asset_class_too_big_to_fail/
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