Chapter 6: Real Estate — The Biggest Bet Most People Make
Owning property went from a privilege of aristocrats to the American Dream. Mortgages, securitization, and the belief that house prices only go up created the 2008 crisis — the worst financial disaster since the Great Depression.
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For centuries, land ownership meant power, reserved for aristocrats. Peasants rented, serfs were bound. Property dictated your very place in society.
America democratized property. The Homestead Act offered free land; New Deal mortgages made homeownership accessible for ordinary families.
Post-WWII, the suburban boom. Levittown, white picket fences; homeownership became the American Dream, your biggest investment.
Then came securitization. Banks bundled mortgages into bonds, selling them globally. Risk, supposedly, was spread so thin it vanished.
Subprime lending targeted those unable to pay. No income verification, exploding adjustable rates. Banks didn't care; they'd sold the risky mortgage.
In 2008, house prices plummeted. Mortgage-backed securities collapsed, Lehman Brothers fell. The global financial system froze, teetering.
10 million Americans lost homes. Governments bailed out "too big to fail" banks. The American Dream nearly destroyed the global economy.
