My good friend, Theron, pointed this out some time ago. I don't recall what data he was citing, but it appears to have been 100% correct. I have only recently begun to understand that every day Americans who thought that they were one house flip away from riches were a big factor in the bubble.
From CalculatedRisk Blog:
Several readers have asked me to comment on this new paper from Fed economists Haughwout, Lee, Tracy, and van der Klaauw: “Flip This House”: Investor Speculation and the Housing Bubble (ht Josh)
[W]e present new findings from our recent New York Fed study that uses unique data to suggest that real estate “investors”—borrowers who use financial leverage in the form of mortgage credit to purchase multiple residential properties—played a previously unrecognized, but very important, role. These investors likely helped push prices up during 2004-06; but when prices turned down in early 2006, they defaulted in large numbers and thereby contributed importantly to the intensity of the housing cycle’s downward leg.
It was pretty obvious that investor buying was pushing up prices in 2004 and 2005. I wrote a post in April 2005 (over six years ago!) on that subject: Housing: Speculation is the Key (Note: in that 2005 post I treated speculation as storage and showed how speculation pushes up prices during the bubble - and pushes down prices after the bubble bursts).
