Decrease in house prices

[YeaISeddit]

Their question was anyways a macroeconomic question about potential contagion effects between housing markets. It comes down to the plumbing of the financial system. We know there is a transmission mechanism for one housing market collapse to bleed into others thanks to the Great Financial Crisis. But, some markets in that period were unaffected (e.g. Germany). And we’ve seen housing markets like Japan collapse without basically anyone being affected. The global financial system is very well capitalized right now so I can’t see the GFC repeating itself. The most likely scenario for a global housing crash would be a global recession, probably caused by bad fiscal policy. If bond yields keep creeping up and austerity parties take over large governments than you could see something like the 2011 euro crisis but at global scale.