The truly wealthy have reduced real instate investments.

However, there is a lot of speculation in real estate, people buying homes based on assuming that the price will go up. That's the only way an I/O loan makes sense. And it's not the wealthy that are taking out all those I/O loans here; my guess is that it's a mix of speculators and people feeling "If I don't buy now I'll never be able to buy, and I'll be able to refinance in five years".

Only time will tell what happens, but it seems a lot like the dot-bomb boom to me.

Tony