5) Speculating on appreciation over cash flow
Among my coworkers, it's this above all else. There are a few neighborhoods in our area that are booming, meaning $50k+ appreciation in the last year or so on $300k houses, so people are thinking that they're really smart and are $50k richer... in my mind, profit isn't profit until it's realized and the money is in your bank account. Apart from that, I highly doubt that there's much more appreciation to be had in the area.
Another big problem is that people aren't strict enough about cashflow. I know plenty of people who see a $100 month "profit" after principle, interest, and taxes as a good thing, but they're one major repair away from losing a year's worth of money. And then they'll always say, well, I'll take a day off, fly over and fix it myself, but there are massive costs to that too. Argh!