the Real Estate bubble bursting . . . are we there yet?

So, is the wealth created by real estate an illusion or not? That comes down to what side of the housing bubble debate you are on. What is clear is that without the gains in household real estate equity during the past several years, there would have been no wealth creation. This just adds to the danger of the housing bubble. Essentially, we have not been creating other wealth to go along with the increase in real estate equity. Therefore, if the housing bubble bursts, then we have not created other wealth to fall back on. Remember, when you account for inflation the picture is even worse. Adjusted for inflation the mean household net worth in the U.S. from 1999 through the 3rd quarter of 2004 is down substantially. It should also be noted that median household net worth in the U.S. is far less than the mean. In 2000 median household net worth was $55,000. Accordingly, most households don’t have as big of a nest egg as the mean household net worth numbers suggest.