It will erase the increase in net wealth from real estate. It will cause the increasing equity in real estate to cease to be an ATM card for some. How important is that? Not very, except in a few areas. In most areas, particularly in fly over country, real estate has not served as an ATM card, and even on the coasts, it has not for most. Most folks don't borrow from their home equity to travel to Tibet, etc.
I don't think the possibility of erasing the increase in wealth from real estate is something we can blithely dismiss. After all, as stated earlier, it represents approx. 41% of the entire increase in wealth for the last three years. And when you add the fact that the US household financial balance sheet has been falling deeply and steeply into the red ever since the early 1990s, you have the potential for a debt crisis. In addition, as I already mentioned, disposable personal income has not kept pace with the interest we have to pay on our massive debts. The only way out of this mess is for asset appreciation to continue. The asset bubble of the late 1990s allowed Americans to sustain their extreme level of debt for a while, and then the FED manufactured the housing bubble to sustain our debt once the bubble of the late 1990s popped. But what is the FED going to be able to do if the housing bubble pops? They can't go on creating asset bubbles forever. At some point we will have to pay the piper, and as far as I can tell, when that day finally comes, it won't be pretty.