Here we go again: The U.S. is knee-deep in yet another colossal housing bubble—shocker! —blown up by the same tired financial tricks. Prices are soaring, not because of genuine supply and demand, but due to the magical effects of financialization. Decades of housing subsidies, down payment assistance, artificially low interest rates, money printing, and endless bank bailouts have transformed American homes from cozy havens into high-stakes financial assets. The scale of this distortion is off the charts.

What’s truly riveting—beyond the obvious bubble-bursting spectacle—is how everyone talks about it. From investors and NIMBYs (residents who oppose real estate development and infrastructures) to YMIBYs (residents who are pro-housing) and even the neighbor down the street, everyone’s got their own simplistic theory on home prices, each cheerfully backed by their own cherry-picked data.

Take a look at this gem from a Wall Street Journal article:

When the American property boom began in 2016, it was already clear to those paying attention that it had morphed into a bubble and was headed for a spectacular crash.

Naturally, the bubble only got bigger because no one wanted to face reality. Developers, home buyers, real estate agents, and Wall Street banks all chose to ignore the red flags. Developers cleverly hid their debt with the help of bankers and lawyers. Buyers who suspected the market was overbuilt kept buying. Both domestic and foreign investors were happy to throw money at developers, chasing after those juicy returns.

Everyone operated under the delusion that the government would step in to prevent a market collapse. After all, Americans had most of their wealth tied up in housing. Letting the market tank could wipe out savings and seriously mess with public confidence.

The original article, “The Folly of China’s Real-Estate Boom Was Easy to See, but No One Wanted to Stop It,” just needed a swap of “China” for “America” to nail the parallel.

The U.S. has built an economy by treating housing as a financial product, distorting home prices in the short term. A bubble burst seems inevitable, but the timing and extent of the fallout remain anyone’s guess. One thing’s certain: financialization and bailouts have a knack for extending these delusions.

The Wall Street Journal article’s subtitle—”Developers, home buyers, and Western bankers all ignored warning signs; ‘financial anomalies’ and ‘shenanigans'”—indicates that fraud is a staple of any bubble. As the mania grows, concerns about fraud fade. Over time, bad actors drive out those playing by the rules, and the market is dominated by fraud. This was true in the 2000s subprime bubble, the 1980s savings and loan crisis, and it’s happening now.

Last year, the Federal Reserve Bank of Philadelphia released a report on “Owner Occupancy Fraud and Mortgage Performance.” Occupancy fraud involves claiming to live in a home when applying for a mortgage but actually being an investor. This trick lets investors snag preferential loan terms meant for homeowners, skewing the market.

According to the Fed, occupancy fraud is “widespread,” making up “one-third of the effective investor population.” These shady loans are bundled and sold as mortgage-backed securities, a cornerstone of the banking system. Fraudulent loans are also “common in the GSE market” (Fannie Mae and Freddie Mac), both in securities bundles and their own portfolios.

Fraud isn’t limited to residential mortgages. It was recently reported that Fannie and Freddie are updating their rules to address fraud in commercial real estate. Banks must “independently verify financial information related to borrowers for apartment complexes and other multifamily properties.” If this is news, it shouldn’t be surprising.

It gets even better. According to the Journal, banks unloading commercial real estate loans to the government may need to confirm “whether a property borrower has adequate cash” and verify “their source of funds.” What were banks doing before? If this revelation surprises anyone, they haven’t been paying attention to past bubbles.

In a comically nostalgic twist reminiscent of 2008, Fannie and Freddie now require banks to “complete due diligence on the appraised value of a property.” Banks often prefer to accept figures they’re given rather than risk expensive audits or losing clients over too much red tape.

This situation illustrates how, in a market overrun by fraud, the bad actors inevitably push out those following the rules. These concerns are surfacing now only because the market is slowing down, and everyone’s scrambling for a safe seat.

For those hoping Wall Street and Washington will lead a housing revolution, brace for disappointment. As noted, entities like Fannie Mae are more interested in maintaining high prices than making housing affordable.