An uneven wealth recovery

The wealth gap between whites and minorities widened during the financial crisis, quite the opposite of what many people, including me, had expected. Why?

The financial crisis was preceded by and largely caused by some regional housing bubbles (mostly in states that had mortgages perceived as non-recourse (California and Florida) or housing markets driven by investment from those states (Arizona, Nevada)). Measures of economical fundamentals in the housing market, like inflation adjusted housing prices and price to rent ratios have now returned to pre-bubble levels. So the wealth created by housing appreciation in regional housing bubble markets is gone and mostly likely gone for good. These regions are disproportionately Hispanic (wealth down about 66%) and Asian (wealth down about 50%).

The financial markets, meanwhile, which crashed on the housing bust, have largely recovered, because the financial markets weren't in nearly as much as a bubble as non-financial markets. Those assets are owned disproportionately by whites (wealth down about 16%).

I'm still surprised. While these results make sense for working class to upper middle class families, I'm surprised that the blows suffered by the upper class, who are disproportionately investing in investments like subordinated bonds and investment bank shares that were crushed in the financial crisis and have not recovered, and by stock options, which also seem not to have recovered, somehow weathered the financial crisis with surprisingly little long term harm to their net worth. Perhaps their investments in hedge funds, which did worse than billed but better than almost anything else in the financial markets, helped.