Why Does Real Estate Always Tank The Economy?

Musing tonight and I can’t get this one out of my head. What is it about real estate that causes it always, it seems, to be a big part of our economic calamities?

I am not well enough versed on the Great Depression to know the extent that real estate failures had on the economy but certainly the two of the last three serious dislocations have been tied directly to the industry. I may be underestimating the part it played in the ’70′s malaise as well as the 1980/1982 recessions as well.

Why? I can’t figure it out, so if you’ve got an idea let me know. It seems that we should try and get a handle on this as perpetually bailing out financial institutions that go all in on the sector is a losing proposition.

Let me know what you think might be behind the problem and how it might be dealt with.

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