Fannie Mae-No Politics (FNMA)

[tetondon]

The GSEs' very existence as a guaranteed buyer of mortgages contributes to the high prices of houses (relative to income). Look at that data (income to house prices) and you'll see a very steady ratio going back hundreds of years. But that ratio began to change when the GSEs were born. And then house prices skyrocketed compared to incomes in the 1990s once the politicization of the GSEs' mission became more forceful. That's a bigger reason for price increases, I think, than the mere existence of the GSEs as guaranteed buyers of mortgages.

You are factually wrong.

Inflation adjusted housing prices didn't change until the 2000s.

Subprime lending increased at that time, and it was private lenders issuing them, and they bundled them into their own MBSs, not the GSEs'.