In fact, purchasing a house using debt was a profitable investment in the early 2000s.
While it is hard to know with any certainty what these individual households believed at the time, it seems quite plausible to me, as others have argued, that stagnant wages and rising inequality, in combination with the relaxation of underwriting standards, led to an increase in the use of credit unsupported by greater income.7 Inequality and the Great Recession Given these developments, when house prices fell, household finances were struck a devastating blow.