In this post, we present new findings from our recent New York Fed study that uses unique data to suggest that real estate “investors”—borrowers who use financial leverage in the form of mortgage credit to purchase multiple residential properties—played a previously unrecognized, but very important, role. These investors likely helped push prices up during 2004-06; but when prices turned down in early 2006, they defaulted in large numbers and thereby contributed importantly to the intensity of the housing cycle’s downward leg.
So, it's largely wealthy speculators, not the poor, black people that the righties love to blame, that caused real estate values to plummet. Don't even get me started on the whole mortgage-backed securities trades, which produced a "moonbeam economy" much vaster than the real economy.
The CNN article glosses over these inconvenient facts, but some of the commenters get it. "TFF17"'s comment pretty much nails it:
"The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families."
No -- it indicates that the 2007 survey was inflated by bubblicious housing values. That "net worth" was not the result of saving and investing, it was the result of a large run-up in price over the five years prior -- much of which was immediately spent.
Of course, the fact that the banks actually owned these houses means that they didn't represent a family's "net worth"... "debt worth" is more like it.
Of course, Mitt Romney's plan would ensure that American families would lose much, much more than 40% of their net worth:
To me, the most damning thing about Mitt's prescription for housing is that he wants "investors" to purchase these houses and rent them out. To him, our society insufficiently resembles feudalism.
The biggest problem in our housing situation is that people have lost sight of what a house is. It's not