Housing Bubble 2.0: Echoes of 2008

Thesis by Blake Huber, based on his presentation "Housing Bubble 2.0 | Return Of Last War" (TIG, May 2026): https://theinvestcollective.com/research/housing-bubble-2-0-return-of-last-war

U.S. residential real estate is more overvalued today than at the 2006–2008 peak across 20+ major metros. With the median home now at ~7x median income (vs. ~1.2x in 1970 and a ~3x historical norm), mortgage rates elevated, and affordability at multi-decade lows, conditions are in place for a multi-year correction. Confirmation should appear in falling home prices, weakening homebuilder and REIT equities, regional-bank stress, and rising months-of-supply — the same chain that broke in '07–'08.

Unlike 2008, today's housing bubble isn't built on bad lending — it's built on structurally unaffordable prices propped up by the rate lock-in effect, where sellers holding 3% mortgages can't afford to move into 7%+ financing. When life events (divorce, death, job relocation) force those locked-in sellers to transact, the artificial supply suppression releases and prices face gravity without affordability support from current rates. The median home at ~7x median income has only three paths back to historical norms — prices fall, incomes surge, or rates crash — and with the Fed on hold, only the first two are structurally available. Regional bank and REIT exposure creates systemic amplification risk similar to the 2007 chain of transmission.