Declining real estate values is the cause: the cause was not real estate valuation, but the loan creation process that used low interest rates put in place by Alan Greenspan and the Clinton Administration mucking around with the CRA (ACORN action exacerbated this intervention).
When the interest rates were manipulated after 911 to hang around 1% for almost 18 months, it was the unsupervised (by states the biggest culprit) loan underwriting process (CRA, Fannie Mae, Freddie Mac, mortgage backed securitization, roll-up to CDO, and writing CDS to raise acceptance of these investment vehicles to the entire world). Real estate values went up as the interest rates went down: direct cause and effect.
My previous posts have discussed these financial technical concepts.
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