The drop in home price appreciation (HPA) was the crash that preceded the current economic pileup, figuratively speaking. With the expected recession intensifying the unemployment rate in the U.S., the HPA decline might be further exacerbated despite the Federal Reserve's attempts to curb payment shock.

In the past, whenever housing has done poorly, it has been preceded by a rising unemployment rate, said Ajay Rajadhyaksha, head of U.S. fixed income strategy at Barclays Capital. For example, after the end of the cold war in 1989, and with the closure of many defense bases in California leading to the loss of 150,000 jobs, the unemployment rate rose to approximately 9%. Not long after, home prices began to drop and California was hit with a housing bust.

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