Dave is spot on here. The 2008 comparison is lazy because the credit quality today is a totally different animal. When most mortgages have 760+ FICO scores, you are not looking at a subprime time bomb. The lock-in effect is also doing a massive amount of heavy lifting on the supply side.
We are looking at a massive wall of commercial real estate debt maturing over the next 24 months. Multifamily and office assets that were underwritten at 3% cap rates are having to refinance at 7% right now. The crash is not happening on Main Street with single family homes. It is happening on Wall Street with institutional portfolio valuations. That is where the forced selling is going to come from, not from residential foreclosures.
The real wildcard is the labor market, exactly like Dave said. Tech and white collar layoffs are not fully showing up in the BLS numbers yet because healthcare and government hiring are masking it. If W2 income actually cracks, the Great Stall breaks. A 10% probability for a sudden housing crash feels right, but the slow burn in commercial debt is already here.
