Fed bames investors for housing bubble. Thoughts?

[Carlos Flores]

What do you think about the following AP story from The Register-Guard, Eugene, Oregon, USA?

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Federal report says home-flipping drove the housing bubble

By Cristina Silva

The Associated Press

Published: Tuesday, Dec 13, 2011 05:01AM

LAS VEGAS — A new federal report indicates that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the Federal Reserve Bank of New York found that investors who used low-down-payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

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.

“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 said.

Investors defaulted in large numbers after home values began to drop in 2006.

As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed as people couldn’t or refused to pay their underwater mortgages. Residential construction also languished, putting hundreds of construction workers out of work.

[Rob Gillespie]

Well my opinion is that we all played a part in this bubble. I know I sold a ton of homes to people that I could not believe banks would approve. The appraisers, realtors and underwriters at banks all turned a blind eye to what was going on. The big lenders knew they were bundling junk and selling it on wall street, and the buyers of the debt wanted to impress their shareholders with great retunes even if they knew it would be short term.

Lets not forget the homeowners that knew that could not maintain making payments once they went adjustable, but just figured they would cross that bridge when they got there!

I do not feel sorry for anyone or the situation the housing market is in. It is just a chapter in the book of life and there is good and bad with the outcome.

My 2 cents, it is what it is! we got lemons, lets make lemon aid!!!!