THE FED STOPPED BUYING MORTGAGES TOO
It's now been more than a decade since we had any idea what real estate prices actually would be without enormous amounts of stimulus from the Fed. The money-printing-for-mortgages scheme entered its first phase between 2009 and 2010 and then was almost non-stop from 2013 to 2022, topping out at around $1.7 trillion in 2018. The Fed had begun to pull back on its MBS assets in 2018 and 2019, but of course, reversed course in 2020 and engaged in a frenzy of new MBS buying. In that period the Fed purchased an additional $1.4 trillion in MBS. That finally ended (for now) in the fall of 2022. The Fed still holds over $2.6 trillion in MBS assets.
If we look at year-over-year changes in these MBS purchases alongside Case-Shiller home prices, we again see a clear correlation. It's clear that once markets think the Fed may again increase its MBS purchases, home prices again surge. Since 2020, the Fed’s MBS stockpile has equaled at least 20 percent of all the household mortgage debt in the United States. In early 2022, Fed-held MBS assets peaked at 24 percent of all US mortgage debt, but they still made up over 20 percent of the market as of late 2022.