The Foreclosure Crisis Recovery Is Enriching the Elite

As the housing market continues to rebound, it appears that those benefiting the most from the recovery are wealthy Americans and real estate corporations.  In her New York Times piece  Boom Bust Flip, economic reporter Catherine Rampell describes how most foreclosures during the mortgage crisis occurred in middle and lower class neighborhoods, often when big banks refused to renegotiate mortgages.  Most purchasers of foreclosed properties in the past five years have been wealthy Americans and large corporations like Blackstone, the private equity giant.  Foreclosed properties were purchased at deep discounts and are now being resold at close to or in excess of the the original purchase price of those that were foreclosed on – meaning that housing prices have rebounded in some areas to close to pre-crisis levels.  However now, the original middle and lower class homeowners have foreclosures on their record while wealthy Americans and large corporations are profiting handsomely on the housing price rebound. 

Once again, Main Street suffers while Wall Street scoops up piles of cash.  As noted by Rampell: “The boom-bust-flip phenomenon is just one of the most obvious ways that
research suggests the financial crisis has benefited the upper class
while brutalizing the middle class. . . . Even before the recession, inequality was growing. Now, despite all the
promises that politicians of both parties have made, the housing market
and public policy are helping to accelerate the [inequality] trend.”