I have mentioned several times over a span of months, that the entire economic crisis started with the collapse of real estate prices in California.

Eveyone with half a brain (or more) knew that a 4 bedroom/2 bath house in the San Fernando Valley was not really worth $720,000, but loan companies supported those prices with loans. Appraisers supported those prices with their "equivalent home sales" as they are required to do. Real estate agents got their 6% commission based on the inflated prices. People selling houses for which they had paid a fration of the selling price just a few years earlier were thrilled. Fantasy Land was real, it seemed - at least the money it put in some people's pockets was real.