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Comment by throwawaydbfif | Hacker News Reader

Another way to look at it is that home buying in the millennial generation is at a historical low. They are the biggest generation besides boomers so the effect of this is somewhat magnified.

"Devastating" the housing market to make it possible for younger Americans to buy homes again will only decrease wealth inequality since the ones who own homes are generally wealthy.

It's not like the houses will suddenly go away if housing prices drop. They are hard assets, nothing is destroyed by the lowering of housing values besides speculative worth.

Sure some people would lose a lot of money but it would largely hurt the wealthy and help income equality along with leveling the gap a bit between those generations and poorest one in our history

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> ... will only decrease wealth inequality since the ones who own homes are generally wealthy.

I beg to differ. Wealthy will be fine because they have diversified assets. The ones truly hurt would be people in their 30's, who have just started putting down roots (first home, family etc) and would have invested a chunk of their savings in the downpayment. So wealth inequality might reduce a bit between top 20% and bottom 20%. But it will increase between 1% and the rest.

> ...nothing is destroyed by the lowering of housing values besides speculative worth.

Household balance sheets for middle-class, whose main asset is their homes, are destroyed. Now suddenly you are left with, say, a mortgage of 400K vs a house worth only 250K.

> ... help income equality along with leveling the gap a bit ...

Nope - the boomers would still fare better since their mortgages should have been paid off by now (generally), and they have a decent rich safety net. Ones screwed are genX and genY as I explained above.

I think you're grossly underestimating the amount of money rich people have socked away in physical property. Besides the stock markets it's the largest investment market by far. This includes commercial property as well.

The boomers have more invested in the houses so more to lose. Having a home paid off just means even more money invested in your home, not less. Gen X and y will be hurt but not as much because defaulting on a loan will mean the liability goes back to the bank. Strategic default has been a thing since Britain abolished debtors prisons, and if you lose enough value in something you don't own there's always the option to walk away. If you own your house you absorb 100% of the loss of your asset with no way out.

The banks will be forced to make concessions to those with mortgages or face 100% of the value loss on their own balance sheets, so the effect on those who don't completely own their property will be muted and shared between with the lenders

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