Now the Alt-A loans are getting hit with more defaults, and this sector was originally considered safe. Not any more.
More defaults means housing prices will drop because of all the distressed homes on the market. Current homeowners who are still solvent will find it harder to trade up because there will be fewer buyers for their house.
Appraisers, real estate agents, contractors, Home Depot, etc. will all have less business and less income.
Just another example of the boom-bust cycles of capitalism…