The article from MSNBC is interesting, but it's not accurate to say that flippers are "largely to blame for the recession." Clearly they were important and apparently more important than experts thought, but let's put the primary blame for this recession where it belongs, with the financial industry. That's the industry that lobbied Washington to scrap the rules that worked for decades. Liar loans weren't created by buyers. They were created by the financial industry so they could sell more trash and get commissions and fees.
Buyers, especially flippers, deserve their fair share of blame, but to ignore the structural changes in the system that happened due to specific policies is dishonest. Those structural changes did happen thanks to Washington with high approval by both parties. As much as the political class would like to ignore that reality, it's the way it is.
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 noted.
