Fed blames flippers for the housing bubble
The Federal Reserve Bank of New York singles out real estate speculators for causing home prices to skyrocket, but many other factors are to blame
Researchers at the Federal Reserve Bank of New York have been diligently looking for who and what caused the housing bubble. After much consideration, the Fed economists find that investors who already owned a home but were buying for speculative purposes caused home prices to skyrocket.
The Washington Post reports:
More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.
And, “This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family,” the researchers noted.
So forget about cheap interest rates, expanded loan programs from Fannie and Freddie to put everyone in their own home, and Wall Street’s embracing of mortgage securitization. Nope, it was those darn flippers.
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