A housing bubble burst in 2008 pushing the U.S. into deepest recession since the Great Depression. In the aftermath, many nations developed new tools designed to take the air out of real-estate bubbles before they burst. The U.S. has lagged in some respects, in part because of the deregulatory zeal of the Trump administration.

Some reformers, sensing danger, want the Biden administration and the Federal Reserve to develop new tools and take action to catch up. Others worry that efforts to deflate bubbles will, in the end, only hurt the poor and the middle class.

Developments this year have focused attention on the issue. Home prices are rising at their fastest pace in history, fueling concern that a new real estate bubble has formed.

These double-digit home price increases have led some to call on the Fed to raise interest rates. So far, Federal Reserve Chairman Jerome Powell has resisted those calls, arguing that higher…

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