Much of it was made out of air in the first place. Something without real value (artificially low rate credit) was chasing overpriced goods. Overpriced, as the credit offered with terms above the ability to pay them back generated more demand than market forces should have dictated.
When someone is offering a home loan that’s under water at the onset, people overbuy, figuring the value of the home will go up & a more conventional loan can be taken out down the road. You have a lot of people make that gamble, it inflates the market, people willing to bid higher than they otherwise would.
When the true market value tries to assert itself, due to defaults, wild credit & terms dry up. Then you have fewer buyers chasing the goods, which deflates the value to a more realistic market value, dictated by a greater ratio of *qualified* buyers.
Housing was only one sector where that sort of thing was going on. Many of the instruments that underpinned the activity were leveraged, which inserted even more air.
Thanks. I searched the net after posting the Q and your answer was universal. There really was no wealth unless you were one of the few who cashed out at the top of the “moments”. Like buying a boat for 500 and someone want to give me 5000. Unless I take it at that moment the boats value is not 5000.
Thanks for the post.
One that curled my hair was Merced, CA with an unemployment rate of 18.9%(!!!)