Speculators Played Key Role in Housing Boom

Washington, DC, Dec. 9, 2011 -- A new Federal Reserve report blames speculators for inflating home prices from 2004-2006, and the effect was particularly acute in the most overheated markets.

The research shows that at the peak of the housing boom, more than one third of home-purchase mortgages went to people who already owned at least one house (compared with 20% in 2000).

Also, the research shows how investors were particularly likely to use subprime loans to make te purchases. Those loans often featured small or no down payments.

The research also shows significant “occupancy fraud,” as speculators often got away without identifying themselves as investors.