A lot of Americans took on debt for boob jobs, boats, and trips to bermuda. The NYTimes did an interesting series on why so many jumped into the "debt trap". It is unfair to imply that this behavior was conducted by all Americans. Many were responsible and more thoughtful about taking risks. Many even realized the generational penalty we would pay for all the play.
Here is a little write up on the impact of interest rates and housing prices. Rates will have to rise (lets hope) and that will cause a deflationary pressure on housing prices. Maybe the government should prop housing prices with the Mick Pattinson solution of increasing permit fees and legal hurdles for development. We all know that the cost of production is what sets the price of a home. The papers printed that anyways.
Here is an example house that is for sale on Crocus:
Below are the zillow market price estimates.
click to enlarge
You can see that the Zillow estimate for this house and for 92024 demonstrates a substantial drop in real estate prices, since the peak. The Fed can't lower interest rates enough to shove prices back up, especially in this economy. No more housing credit ATM machines. Good thing a lot of us didn't over leverage.