I've long argued that the massive ideological and demographic trends in our society toward "diversity" played an underappreciated role in the disaster. Now we're now getting very close to finding the smoking gun that proves my "Diversity Recession" theory.
Many readers have expressed doubts that minorities could possibly play a large enough role in the mortgage market to matter. Actually, they do. In fact, we can now see that, more than anything else, the Housing Bubble was a Hispanic Housing Bubble. Mortgage dollars flowing to Hispanics for home purchases increasing almost eightfold from 1999 to 2006!
As I've argued, the Bush Administration wanted to turn Hispanics into Republican voters by making them homeowners through easy credit. George W. Bush and Karl Rove don't deserve all the blame, however. Their lax mortgage policies were largely a continuation of trends to boost minority and low income mortgage access that were well under way in the Clinton Administration—as I pointed out in my June Takimag.com article on "The Diversity Recession." These lax mortgage policies also had the secondary effect of encouraging residential real estate speculation—“flipping”—by minorities and non-minorities alike.The federal government doesn't make it easy for citizens to find information on mortgage defaults and foreclosures by race. But it does collect a huge amount of information by race on mortgages handed out, in order to encourage lending to minorities by threatening lawsuits against financial institutions accused of discriminating against them.
Minorities tend to be concentrated in metropolitan areas with expensive land prices. Rural areas with very cheap land are almost all white.
Further, America's largest and most expensive state, California, the epicenter of the housing bubble and thus the global financial earthquake due to subprime defaults, is now majority minority (with non-Hispanic whites making up only 43 percent of the financially tarnished Golden State's population in 2005).