My parents were stung by the 1990s crash and never really recovered from it.
They bought at the top of the market in 1989 and my dad's company subsequently went under. They were hit by the crazy interest rates and nearly lost the house. They've never moved and whilst the house has increased in value, its not as much as you might think because we are in the north west.
The problem was compounded by the fact that they were given advice to take out an endowment mortgage, which didn't cover the cost of the mortgage when it matured. There was a scandal over it, and they were entitled to compensation, but that didn't really cover the short fall. The upshot of that was they didn't pay off the mortgage until really late and it really affected their pension provision.
The situation is now, that they are short on their pension so at some point will have to sell to cover their care in the future and there isn't going to anything left from that. There will be no inheritance.
Tbh I'm not expecting any inheritance. We don't need it. (our finances are better than my parents which is unusual for anyone else we know who is our age in our social circle - the opposite is true for everyone one else). I just hope that my parents can cover their care costs because that would be a huge burden on us otherwise.
So I disagree that every who got hit hard by the 1990s crash recovered from it, in the same why that I don't believe that many people who got hit hard by the 2008 crash will (again we are the exception to the rule on that one but are a lot worse off for it, compared to friends in our social circle in comparible areas of work who are 10 years older. The only reason we are doing ok is because DH is at least two grades above they were with all the responsibilities and work stress that come with that).
The worrying thing for me is listening to friends talk about the financial advice they are currently getting. They are being told by a financial advisor to invest in shares. They recommended him to us, and we've ignored because he been going around saying 'don't put the money into your mortgage, put it into shares then cash it in and pay off theremainder of your mortgage'. This fills me with terror given the economic outlook and how this is exactly the trap my parents fell into all those years ago, yet people still think its a cracking idea. We know it might not be the best way to cover the mortgage to stick to the traditional way to repay, especially with rising of interest rates. But at the same time its safer and we can plan financially long term without that higher risk.
People want to make the same mistake and take the short cuts, and I do think thats a massive part of the problem which creates these fluxations in the market when the whole thing goes bust from over gambling. The winners are the traders who play the market. The losers are those who risk their even security on the chance of high rewards and ignore the possibility of it going tits up.
You wouldn't bet your house on the horses, yet time and again people do similar with various dubious financial set ups and over stretching on houses because they want to (rather than because they need to). That bigger kitchen in the more expensive house cant really afford, isn't necessarily worth it. Many people don't have the luxury of this type of choice but there are a sizable number who do, and who put the rest of the market at risk.
I find the whole thing incredibly frustrating. DH and I have purposefully not played the game on this and sometimes its felt like a mistake. On the other hand, we aren't kept awake at night worrying about thr mortgage. We have plenty that keeps us awake at night but thats not one of the things. That in itself is a luxury, im grateful for.