Unless I misunderstood you, we’re not looking at people taking money out of housing. We’re looking at wealth vanishing.

If a guy bought a house in 2000, and somebody buys an identical property for 300k more in 2004, the first guy, and everyone in his position, has (or feels like they have, and usually spends like they have) $300k more than they used to. But if in 2007 another identical house sells for just $50k more than the 2000 price, $250,000 of the first guy’s paper wealth would be gone – not removed, not reinvested, not even stolen. It just wouldn’t exist anymore.

‘Taking money out of housing’ makes it sound like when you squeeze one part of a balloon and another part gets bigger. But when the housing balloon gets squeezed too much….