Americans lost $8 trillion in home equity over the past few years (and another $7 trillion in stock value last year). No wonder we aren’t spending money like we were. Many that write or talk about the economy seem oblivious to this rather basic fact.
The Washington Post, which was famous for relying on David Lereah, the chief economist of the National Association of Realtors (NAR), as its main expert on housing (also the author of Why the Housing Boom Will Not Bust and How You Can Profit from It), is still missing the housing bubble.
An article that discusses aspects of the bubble and how it has hit a family in California refers to the “mortgage mess.” Of course the mortgage mess is secondary. The problem stems from the fact that prices became hugely inflated and have now crashed. If house prices had followed a normal pattern of rising in step with inflation, the problems presented by the bad mortgages issued during this period would be relatively minor.
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