Report: House Flippers Drove Market Surge, Crash
LAS VEGAS (AP) — The Federal Reserve Bank of New York says real estate investors drove the housing bubble that led to record foreclosures in Nevada, California, Arizona, Florida and other states.
The report released last week says the financial crisis was amplified by the rise and fall of housing prices during the last decade.
The report says investors who used mortgage credits to purchase multiple residential properties helped inflate home prices. According to the report, more than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house.
Those buyers then defaulted in large numbers after home values began to drop.
The report notes that in Arizona, California, Florida and Nevada, investors made up nearly half of all mortgage-backed purchases.
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