Oh, I agree that some people are going to suffer because they overpaid for their houses, but you make it sound like every homeowner is in this same situation, which is definitely not the case.
I do agree this is going to be a drag on the economy, lots of people are going to lose real money. We built houses that people cannot afford, we built houses in the wrong areas etc... we had a massive case of malinvestment so of course there is going to be pain when it's corrected that is only natural.
Also a lot of people think houses are good investments, when most of the time they are not, in fact most people would be able to have a nicer place and save more money if they rented. Just because people believe something does mean it's true.
Edit: Also a lot of people may feel like they're losing money, because the artificially high price that they thought there house was worse is no longer there -- whether or not purchased a house in the last few years.
I do agree this is going to be a drag on the economy, lots of people are going to lose real money. We built houses that people cannot afford, we built houses in the wrong areas etc... we had a massive case of malinvestment so of course there is going to be pain when it's corrected that is only natural.
Also a lot of people think houses are good investments, when most of the time they are not, in fact most people would be able to have a nicer place and save more money if they rented. Just because people believe something does mean it's true.
Edit: Also a lot of people may feel like they're losing money, because the artificially high price that they thought there house was worse is no longer there -- whether or not purchased a house in the last few years.