that's nothing. my former boss, now current client was worth $500M in 2005. he will be declaring bankruptcy this year.lots of millionaires losing everything right now who made their fortunes during the r/e bust of the early 90s. now there's a lot of new people coming in who will become millionaires off of these misfortunes. the question is whether these new people will be more conservative near the peak and bank their cash or reinvest all the way through the cycle losing everything.Why do you think these guys lost so much? How did folks vested so heavily in the market not see the correction coming? Obviously they're crazy intelligent or else they wouldn't have been so successful early in the bubble. Do you think these guys got greedy, or lazy, or both? yeah, but most people's personal residence is the biggest investment they'll make in their entire lives. buying at the top of a bubble can wipe out years/decades of that investment. if you were to evaluate the ROI of buyers who buy the exact same property who bought at two different times (2006 vs. 2009), by 2020, you'll see a huge difference, in my opinion.losing 20-50% of equity in one's personal residence is nothing to sneeze at bagger, especially if you're making payments on that lost equity.a lot of people made all their money in r/e, thought they were smarter than others, had huge egos, were greedy, lost focus on risk mitigation, and thought that they could out maneuver the market. the majority also have a horrible understanding of capital markets and think that the availability of capital will always be there throughout all cycles.bottom line, most people that had a huge runup and lost it all hadn't gone through a cycle with their own money before. some may have done it with public companies, but it is a completely different beast when its your own money and liquidity is finite.on to your second point, you're right a loss of 20%-50% of equity is nothing to sneeze at. people that overpaid near the peak in temecula or other fringe areas in overheated r/e markets may be better off walking away from their home especially if they're in poor mortgages or have realized the area they are in is not a desirable long term area to live. there's no doubt that people that got sucked in at the peak are in a world of hurt, however in 10 years many will have likely recouped all of their losses and made a solid return their investment even from their horrendous initial basis, as long as you're in a fundamentally strong market like the sun belt or so cal.there's a mantra in r/e that you make your money on the buy, not on the sale, and is something i strongly believe in. you're right someone that buys in 2009 will do much much better than someone who bought in 2006. however, if that person who bought in 2006 can make the payments and love living in their home over the long run they will have significant equity in their house.my parents bought their home in 1978 in SoCal and still live in it. bought it for $90k, it is now worth in today's market of around $800k (down from $1.1M around the 2006 peak).this is the long run i am talking about.you're obviously doing your homework, more than most people do, so i think when you decide to buy you'll be in at a good basis.