There is another fundamental difference between the stock market and the real estate market.
The real estate market is generally driven by must have purchases, by that I mean that everyone must have a place to live. Money spent, for the most part, is counted as part of your living expenses and therefore comes out of your non-disposable income pool.
The stock market is driven by investments, this is money that is extra, beyond your normal living expenses, and is considered not must have purchases.
The former is tied to income, the latter is not.
The real estate bubble happened because the housing market became the playground of Wall Street and was treated as yet another market to invest in. This, of course, drove up prices beyond logic. The trouble is, that Wall Street pulls out as soon as the market turns, caring nothing for the devastation that it causes. Normally this is of limited concern, because the devastation is limited to what ever company/mutual fund/etc. was being invested in, but when that market is the real estate market, that everyone depends on, it has drastic results, as we’re seeing.
I wish Wall Street kept out of places that it does not belong in, but such are those who want to make a buck without caring who’s lives they’re ruining.
