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Some people seem to believe that there is some sort of “absolute†value in housing, completely independent of what the bank will lend
Yes, those people are called patrick.net posters.
Home loans are not self-liquidating in the sense that there is a business entity that pays off the loan out of business income. The borrower must pay off the loan out of his personal funds, which can depend on many, many factors (health problems, unemployment, outsourcing, etc).
I don't think many business owners would view their loans as "self-liquidating" either, given that businesses are also subject to "many, many factors" that can affect the business' income and profits, and therefore ability to repay the loan.
Despite how impossible you make it sound, most people manage to go out there, compete, and come home with enough money to pay the mortgage, everything else, and still buy a flat screen TV on top of it. Additionally, for most, especially these day with more normal lending standards back in vogue, the bank passes judgment on one's ability to compete and repay.
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#housing