Well for most Americans the biggest loan they’ll take out in their life is a loan for a home. Home prices since haven’t dropped to a reasonable level. Rents have increased everywhere. Most people are barely scraping a down payment together to get into a house.

If banks aren’t lending, then people cannot buy overpriced homes, thus the homes will sit on the market longer and typically drop in price. That’s the housing market dropping.

Now we have California paying the 20% down with 0 interest if you make less than 211k/yr.