United States housing bubble - Wikipedia

The United States housing bubble was a real estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. UnitedStateshousingbubble FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Economicbubble Arequestthatthisarticletitlebechanged to2000sUnitedStateshousingbubbleisunderdiscussion.Pleasedonotmovethisarticleuntilthediscussionisclosed. Fig.1:RobertShiller'splotofU.S.homeprices,population,buildingcosts,andbondyields,fromIrrationalExuberance,2nded.[1]Shillershowsthatinflation-adjustedU.S.homepricesincreased0.4%peryearfrom1890to2004and0.7%peryearfrom1940to2004,whereasU.S.censusdatafrom1940to2004showsthattheself-assessedvalueincreased2%peryear. PartofaseriesontheGreatRecession Majoraspects Subprimemortgagecrisis 2000senergycrisis UnitedStateshousingbubble UnitedStateshousingmarketcorrection Financialcrisisof2007–2008 Automotiveindustrycrisisof2008–2010 Dodd–FrankWallStreetReformandConsumerProtectionAct Europeandebtcrisis Causes CausesoftheEuropeandebtcrisis CausesoftheUnitedStateshousingbubble Creditratingagenciesandthesubprimecrisis Governmentpoliciesandthesubprimemortgagecrisis Summitmeetings 34thG8summit(July2008) G-20Washingtonsummit(November2008) APECPeru(November2008) China–Japan–SouthKoreatrilateralsummit(December2008) G-20LondonSummit(April2009) Governmentresponseandpolicyproposals 2008EuropeanUnionstimulusplan 2008–2009Keynesianresurgence AmericanRecoveryandReinvestmentActof2009 Banking(SpecialProvisions)Act2008 Chineseeconomicstimulusprogram EconomicStimulusActof2008 EmergencyEconomicStabilizationActof2008 FederalReserveresponsestothesubprimecrisis Governmentinterventionduringthesubprimemortgagecrisis GreenNewDeal HousingandEconomicRecoveryActof2008 NationalfiscalpolicyresponsetotheGreatRecession Regulatoryresponsestothesubprimecrisis Subprimemortgagecrisissolutionsdebate TermAsset-BackedSecuritiesLoanFacility TroubledAssetReliefProgram(TARP) Businessfailures AmericanInternationalGroup Chrysler Citigroup FannieMae FreddieMac GeneralMotors LehmanBrothers RoyalBankofScotlandGroup UBS Relatedlist: ListofbanksacquiredorbankruptedduringtheGreatRecession vte TheUnitedStateshousingbubblewasarealestatebubbleaffectingoverhalfoftheU.S.states.Itwastheimpetusforthesubprimemortgagecrisis.Housingpricespeakedinearly2006,startedtodeclinein2006and2007,andreachednewlowsin2012.[2]OnDecember30,2008,theCase–Shillerhomepriceindexreporteditslargestpricedropinitshistory.[3]ThecreditcrisisresultingfromtheburstingofthehousingbubbleisanimportantcauseoftheGreatRecessionintheUnitedStates.[4] Increasedforeclosureratesin2006–2007amongU.S.homeownersledtoacrisisinAugust2008forthesubprime,Alt-A,collateralizeddebtobligation(CDO),mortgage,credit,hedgefund,andforeignbankmarkets.[5]InOctober2007,theU.S.SecretaryoftheTreasurycalledtheburstinghousingbubble"themostsignificantrisktooureconomy".[6] AnycollapseoftheU.S.housingbubblehasadirectimpactnotonlyonhomevaluations,butmortgagemarkets,homebuilders,realestate,homesupplyretailoutlets,WallStreethedgefundsheldbylargeinstitutionalinvestors,andforeignbanks,increasingtheriskofanationwiderecession.[7][8][9][10]ConcernsabouttheimpactofthecollapsinghousingandcreditmarketsonthelargerU.S.economycausedPresidentGeorgeW.BushandtheChairmanoftheFederalReserveBenBernanketoannouncealimitedbailoutoftheU.S.housingmarketforhomeownerswhowereunabletopaytheirmortgagedebts.[11] In2008alone,theUnitedStatesgovernmentallocatedover$900billiontospecialloansandrescuesrelatedtotheU.S.housingbubble.Thiswassharedbetweenthepublicsectorandtheprivatesector.BecauseofthelargemarketshareofFederalNationalMortgageAssociation(FannieMae)andtheFederalHomeLoanMortgageCorporation(FreddieMac)(bothofwhicharegovernment-sponsoredenterprises)aswellastheFederalHousingAdministration,theyreceivedasubstantialshareofgovernmentsupport,eventhoughtheirmortgagesweremoreconservativelyunderwrittenandactuallyperformedbetterthanthoseoftheprivatesector.[12] Contents 1Background 2Timeline 3Identification 4Causes 5Extent 6Sideeffects 7Housingmarketcorrection 7.1Subprimemortgageindustrycollapse 8Seealso 9Notes 10Furtherreading 10.1Booksandbookchapters 10.2Articles 11Externallinks Background[edit] Landpricescontributedmuchmoretothepriceincreasesthandidstructures.ThiscanbeseeninthebuildingcostindexinFig.1.Anestimateoflandvalueforahousecanbederivedbysubtractingthereplacementvalueofthestructure,adjustedfordepreciation,fromthehomeprice.Usingthismethodology,DavisandPalumbocalculatedlandvaluesfor46U.S.metroareas,whichcanbefoundatthewebsitefortheLincolnInstituteforLandPolicy.[13] Housingbubblesmayoccurinlocalorglobalrealestatemarkets.Intheirlatestages,theyaretypicallycharacterizedbyrapidincreasesinthevaluationsofrealpropertyuntilunsustainablelevelsarereachedrelativetoincomes,price-to-rentratios,andothereconomicindicatorsofaffordability.Thismaybefollowedbydecreasesinhomepricesthatresultinmanyownersfindingthemselvesinapositionofnegativeequity—amortgagedebthigherthanthevalueoftheproperty.Theunderlyingcausesofthehousingbubblearecomplex.Factorsincludetaxpolicy(exemptionofhousingfromcapitalgains),historicallylowinterestrates,laxlendingstandards,failureofregulatorstointervene,andspeculativefever.[5][7][14][15][16][17]Thisbubblemayberelatedtothestockmarketordot-combubbleofthe1990s.[1][18][19][20][21]ThisbubbleroughlycoincideswiththerealestatebubblesoftheUnitedKingdom,HongKong,Spain,[22]Poland,HungaryandSouthKorea.[23][24] Whilebubblesmaybeidentifiableinprogress,bubblescanbedefinitivelymeasuredonlyinhindsightafteramarketcorrection,[25]whichbeganin2005–2006fortheU.S.housingmarket.[26][27][28][29][30][31]FormerU.S.FederalReserveBoardChairmanAlanGreenspansaid"Wehadabubbleinhousing",[32][33]andalsosaidinthewakeofthesubprimemortgageandcreditcrisisin2007,"Ireallydidn'tgetituntilverylatein2005and2006."In2001,AlanGreenspandroppedinterestratestoalow1%inordertojumptheeconomyafterthe".com"bubble.ItwasthenbankersandotherWallStreetfirmsstartedborrowingmoneyduetoitsinexpensiveness.[34] Themortgageandcreditcrisiswascausedbytheinabilityofalargenumberofhomeownerstopaytheirmortgagesastheirlowintroductory-ratemortgagesrevertedtoregularinterestrates.FreddieMacCEORichardSyronconcluded,"Wehadabubble",[35]andconcurredwithYaleeconomistRobertShiller'swarningthathomepricesappearovervaluedandthatthecorrectioncouldlastyears,withtrillionsofdollarsofhomevaluebeinglost.[35]Greenspanwarnedof"largedoubledigitdeclines"inhomevalues"largerthanmostpeopleexpect".[33] Problemsforhomeownerswithgoodcreditsurfacedinmid-2007,causingtheUnitedStates'largestmortgagelender,CountrywideFinancial,towarnthatarecoveryinthehousingsectorwasnotexpectedtooccuratleastuntil2009becausehomepriceswerefalling"almostlikeneverbefore,withtheexceptionoftheGreatDepression".[8]TheimpactofboominghomevaluationsontheU.S.economysincethe2001–2002recessionwasanimportantfactorintherecovery,becausealargecomponentofconsumerspendingwasfueledbytherelatedrefinancingboom,whichallowedpeopletobothreducetheirmonthlymortgagepaymentswithlowerinterestratesandwithdrawequityfromtheirhomesastheirvalueincreased.[7] Timeline[edit] Mainarticle:TimelineoftheUnitedStateshousingbubble Identification[edit] AgraphshowingthemedianandaveragesalespricesofnewhomessoldintheUnitedStatesbetween1963and2010.[36] Althoughaneconomicbubbleisdifficulttoidentifyexceptinhindsight,numerouseconomicandculturalfactorsledseveraleconomists(especiallyinlate2004andearly2005)toarguethatahousingbubbleexistedintheU.S.[1][25][37][38][39][40][41][42]DeanBakeridentifiedthebubbleinAugust2002,thereafterrepeatedlywarningofitsnatureanddepth,andthepoliticalreasonsitwasbeingignored.[43][44]Priortothat,RobertPrechterwroteaboutitextensivelyasdidProfessorShillerinhisoriginalpublicationofIrrationalExuberanceintheyear2000. Theburstofthehousingbubblewaspredictedbyahandfulofpoliticalandeconomicanalysts,suchasJefferyRobertHunninaMarch3,2003,editorial.Hunnwrote: [W]ecanprofitfromthecollapseofthecreditbubbleandthesubsequentstockmarketdivestment[(decline)].However,realestatehasnotyetjoinedinadeclineofpricesfedbyselling(andforeclosing).Unlessyouhaveaveryspecificreasontobelievethatrealestatewilloutperformallotherinvestmentsforseveralyears,youmaydeemthisprimetimetoliquidateinvestmentproperty(foruseinmorelucrativemarkets).[45] Manycontestedanysuggestionthattherecouldbeahousingbubble,particularlyatitspeakfrom2004to2006,[46]withsomerejectingthe"housebubble"labelin2008.[47]ClaimsthattherewasnowarningofthecrisiswerefurtherrepudiatedinanAugust2008articleinTheNewYorkTimes,whichreportedthatinmid-2004RichardF.Syron,theCEOofFreddieMac,receivedamemofromDavidAndrukonis,thecompany'sformerchiefriskofficer,warninghimthatFreddieMacwasfinancingrisk-ladenloansthatthreatenedFreddieMac'sfinancialstability.Inhismemo,Mr.Andrukoniswrotethattheseloans"wouldlikelyposeanenormousfinancialandreputationalrisktothecompanyandthecountry".[48]Thearticlerevealedthatmorethantwo-dozenhigh-rankingexecutivessaidthatMr.Syronhadsimplydecidedtoignorethewarnings. Othercautionscameasearlyas2001,whenthelateFederalReservegovernorEdwardGramlichwarnedoftherisksposedbysubprimemortgages.[49]InSeptember2003,atahearingoftheHouseFinancialServicesCommittee,CongressmanRonPaulidentifiedthehousingbubbleandforetoldthedifficultiesitwouldcause:"Likeallartificially-createdbubbles,theboominhousingpricescannotlastforever.Whenhousingpricesfall,homeownerswillexperiencedifficultyastheirequityiswipedout.Furthermore,theholdersofthemortgagedebtwillalsohavealoss."[50]ReutersreportedinOctober2007thataMerrillLynchanalysttoohadwarnedin2006thatcompaniescouldsufferfromtheirsubprimeinvestments. TheEconomistmagazinestated,"Theworldwideriseinhousepricesisthebiggestbubbleinhistory",[51]soanyexplanationneedstoconsideritsglobalcausesaswellasthosespecifictotheUnitedStates.ThethenFederalReserveBoardChairmanAlanGreenspansaidinmid-2005that"ataminimum,there'salittle'froth'(intheU.S.housingmarket)...it'shardnottoseethattherearealotoflocalbubbles";Greenspanadmittedin2007thatfroth"wasaeuphemismforabubble".[33]Inearly2006,PresidentBushsaidoftheU.S.housingboom:"Ifhousesgettooexpensive,peoplewillstopbuyingthem...Economiesshouldcycle".[52] Throughoutthebubbleperiodtherewaslittleifanymentionofthefactthathousinginmanyareaswas(andstillis)sellingforwellabovereplacementcost.[citationneeded] Onthebasisof2006marketdatathatwereindicatingamarkeddecline,includinglowersales,risinginventories,fallingmedianpricesandincreasedforeclosurerates,[citationneeded]someeconomistshaveconcludedthatthecorrectionintheU.S.housingmarketbeganin2006.[9][53]AMay2006FortunemagazinereportontheUShousingbubblestates:"Thegreathousingbubblehasfinallystartedtodeflate...Inmanyonce-sizzlingmarketsaroundthecountry,accountsofdroppinglistpriceshavereplacedtalesofwaitinglistsforunbuiltcondosandbiddingwarsoverhumdrumthree-bedroomcolonials."[27] ThechiefeconomistofFreddieMacandthedirectorofJointCenterforHousingStudies(JCHS)deniedtheexistenceofanationalhousingbubbleandexpresseddoubtthatanysignificantdeclineinhomepriceswaspossible,citingconsistentlyrisingpricessincetheGreatDepression,ananticipatedincreaseddemandfromtheBabyBoomgeneration,andhealthylevelsofemployment.[54][55][56]However,somehavesuggestedthatthefundingreceivedbyJCHSfromtherealestateindustrymayhaveaffectedtheirjudgment.[57]DavidLereah,formerchiefeconomistoftheNationalAssociationofRealtors(NAR),distributed"Anti-BubbleReports"inAugust2005to"respondtotheirresponsiblebubbleaccusationsmadebyyourlocalmediaandlocalacademics".[58] Amongotherstatements,thereportsstatedthatpeople"should[not]beconcernedthathomepricesarerisingfasterthanfamilyincome",that"thereisvirtuallynoriskofanationalhousingpricebubblebasedonthefundamentaldemandforhousingandpredictableeconomicfactors",andthat"ageneralslowingintherateofpricegrowthcanbeexpected,butinmanyareasinventoryshortageswillpersistandhomepricesarelikelytocontinuetoriseabovehistoricnorms".[citationneeded]FollowingreportsofrapidsalesdeclinesandpricedepreciationinAugust2006,[59][60]Lereahadmittedthatheexpected"homepricestocomedown5%nationally,moreinsomemarkets,lessinothers.AndafewcitiesinFloridaandCalifornia,wherehomepricessoaredtonose-bleedheights,couldhave'hardlandings'."[30] NationalhomesalesandpricesbothfelldramaticallyinMarch2007—thesteepestplungesincethe1989SavingsandLoancrisis.AccordingtoNARdata,salesweredown13%to482,000fromthepeakof554,000inMarch2006,andthenationalmedianpricefellnearly6%to$217,000fromapeakof$230,200inJuly2006.[31] JohnA.KilpatrickfromGreenfieldAdvisorswascitedbyBloombergNewsonJune14,2007,onthelinkagebetweenincreasedforeclosuresandlocalizedhousingpricedeclines:"Livinginanareawithmultipleforeclosurescanresultina10percentto20percentdecreaseinpropertyvalues".Hewentontosay,"Insomecasesthatcanwipeouttheequityofhomeownersorleavethemowingmoreontheirmortgagethanthehouseisworth.Theinnocenthousesthatjusthappentobesittingnexttothosepropertiesaregoingtotakeahit."[61] TheUSSenateBankingCommitteeheldhearingsonthehousingbubbleandrelatedloanpracticesin2006,titled"TheHousingBubbleanditsImplicationsfortheEconomy"and"CalculatedRisk:AssessingNon-TraditionalMortgageProducts".FollowingthecollapseofthesubprimemortgageindustryinMarch2007,SenatorChrisDodd,ChairmanoftheBankingCommitteeheldhearingsandaskedexecutivesfromthetopfivesubprimemortgagecompaniestotestifyandexplaintheirlendingpractices.Doddsaidthat"predatorylending"hadendangeredhomeownershipformillionsofpeople.[17]Inaddition,DemocraticsenatorssuchasSenatorCharlesSchumerofNewYorkwerealreadyproposingafederalgovernmentbailoutofsubprimeborrowersinordertosavehomeownersfromlosingtheirresidences.[17] Causes[edit] Mainarticle:CausesoftheUnitedStateshousingbubble Extent[edit] Inflation-adjustedhousingpricesintheUnitedStatesbystate,1998–2006. Homepriceappreciationhasbeennon-uniformtosuchanextentthatsomeeconomists,includingformerFedChairmanAlanGreenspan,havearguedthatUnitedStateswasnotexperiencinganationwidehousingbubbleperse,butanumberoflocalbubbles.[62]However,in2007GreenspanadmittedthattherewasinfactabubbleintheU.S.housingmarket,andthat"allthefrothbubblesadduptoanaggregatebubble".[33] Despitegreatlyrelaxedlendingstandardsandlowinterestrates,manyregionsofthecountrysawverylittlepriceappreciationduringthe"bubbleperiod".Outof20largestmetropolitanareastrackedbytheS&P/Case-Shillerhousepriceindex,six(Dallas,Cleveland,Detroit,Denver,Atlanta,andCharlotte)sawlessthan10%pricegrowthininflation-adjustedtermsin2001–2006.[63]Duringthesameperiod,sevenmetropolitanareas(Tampa,Miami,SanDiego,LosAngeles,LasVegas,Phoenix,andWashington,D.C.)appreciatedbymorethan80%. However,housingbubblesdidnotmanifestthemselvesineachoftheseareasatthesametime.SanDiegoandLosAngeleshadmaintainedconsistentlyhighappreciationratessincelate1990s,whereastheLasVegasandPhoenixbubblesdidnotdevelopuntil2003and2004respectively.ItwasintheEastCoast,themorepopulatedpartofthecountrywheretheeconomicrealestateturmoilwastheworst. Somewhatparadoxically,asthehousingbubbledeflates[64]somemetropolitanareas(suchasDenverandAtlanta)havebeenexperiencinghighforeclosurerates,eventhoughtheydidnotseemuchhouseappreciationinthefirstplaceandthereforedidnotappeartobecontributingtothenationalbubble.ThiswasalsotrueofsomecitiesintheRustBeltsuchasDetroit[65]andCleveland,[66]whereweaklocaleconomieshadproducedlittlehousepriceappreciationearlyinthedecadebutstillsawdecliningvaluesandincreasedforeclosuresin2007.AsofJanuary2009California,Michigan,OhioandFloridawerethestateswiththehighestforeclosurerates. ByJuly2008,year-to-datepriceshaddeclinedin24of25U.S.metropolitanareas,withCaliforniaandthesouthwestexperiencingthegreatestpricefalls.Accordingtothereports,onlyMilwaukeehadseenanincreaseinhousepricesafterJuly2007.[67] Sideeffects[edit] Priortotherealestatemarketcorrectionof2006–2007,theunprecedentedincreaseinhousepricesstartingin1997producednumerouswide-rangingeffectsintheeconomyoftheUnitedStates. Oneofthemostdirecteffectswasontheconstructionofnewhouses.In2005,1,283,000newsingle-familyhousesweresold,comparedwithanaverageof609,000peryearduring1990–1995.[68]Thelargesthomebuilders,suchasD.R.Horton,PulteGroup,andLennar,improvedoperationssignificantly.D.R.Horton'sstockwentfrom$3inearly1997toall-timehighof$42.82onJuly20,2005.PulteCorp'srevenuesgrewfrom$2.33billionin1996to$14.69billionin2005.[69][70][71] Mortgageequitywithdrawals–primarilyhomeequityloansandcashoutrefinancings–grewconsiderablysincetheearly1990s.AccordingtoUSFederalReserveestimates,in2005homeownersextracted$750billionofequityfromtheirhomes(upfrom$106billionin1996),spendingtwothirdsofitonpersonalconsumption,homeimprovements,andcreditcarddebt.[72] Itiswidelybelievedthattheincreaseddegreeofeconomicactivityproducedbytheexpandinghousingbubblein2001–2003waspartlyresponsibleforavertingafull-scalerecessionintheU.S.economyfollowingthedot-combustandoffshoringtoChina.Analystsbelievedthatwiththedownturninthetwosectors,theeconomyfromtheearly2000sto2007evadedwhatwouldhavebeenstagnantgrowthwithaboominghousingmarketcreatingjobs,economicdemandalongwithaconsumerboomthatcamefromhomevaluewithdrawsuntilthehousingmarketbeganacorrection.[73] Rapidlygrowinghousepricesandincreasingpricegradientsforcedmanyresidentstofleetheexpensivecentersofmanymetropolitanareas,resultingintheexplosivegrowthofexurbsinsomeregions.ThepopulationofRiversideCounty,Californiaalmostdoubledfrom1,170,413in1990to2,026,803in2006,duetoitsrelativeproximitytoSanDiegoandLosAngeles.OntheEastCoast,LoudounCounty,Virginia,nearWashington,D.C.,sawitspopulationtriplebetween1990and2006.[74][citationneeded] Extremeregionaldifferencesinlandprices.Thedifferencesinhousingpricesaremainlyduetodifferencesinlandvalues,whichreached85%ofthetotalvalueofhousesinthehighestpricedmarketsatthepeak.[13]TheWisconsinBusinessSchoolpublishesanonlinedatabasewithbuildingcostandlandvaluesfor46U.S.metroareas.[13]Oneofthefastest-growingregionsintheUnitedStatesforthelastseveraldecadeswastheAtlanta,Georgiametroarea,wherelandvaluesareasmallfractionofthoseinthehigh-pricedmarkets.Highlandvaluescontributetohighlivingcostsingeneralandarepartofthereasonforthedeclineoftheoldindustrialcenterswhilenewautomobileplants,forexample,werebuiltthroughouttheSouth,whichgrewinpopulationfasterthantheotherregions. Peoplewhoeitherexperiencedforeclosuresorlivenearforeclosureshaveahigherprobabilityoffallingillorattheveryleastdealingwithincreasedanxiety.Overall,itisreportedthathomeownerswhoareunabletoaffordlivingintheirdesiredlocationsexperiencehigherinstancesofpoorhealth.Besideshealthissues,theunstablehousingmarkethasalsobeenshowntoincreaseinstancesofviolence.Theysubsequentlybegintofearthattheirownhomesmaybetakenfromthem.Increasesinanxietyhaveattheveryleastbeencommonlynoted.Thereisafearthatforeclosuresbringaboutthesereactionsinpeoplewhoanticipatethesamethinghappeningtothem.Anuptickonviolentoccurrenceshasalsobeenshowntofollowneighborhoodswheresuchuncertaintyexists.[citationneeded] Thesetrendswerereversedduringtherealestatemarketcorrectionof2006–2007.AsofAugust2007,D.R.Horton'sandPulteCorp'sshareshadfallento1/3oftheirrespectivepeaklevelsasnewresidentialhomesalesfell.Someofthecitiesandregionsthathadexperiencedthefastestgrowthduring2000–2005begantoexperiencehighforeclosurerates.[64]Itwassuggestedthattheweaknessofthehousingindustryandthelossoftheconsumptionthathadbeendrivenbythewithdrawalofmortgageequitycouldleadtoarecession,butasofmid-2007theexistenceofthisrecessionhadnotyetbeenascertained.[75]InMarch2008,ThomsonFinancialreportedthatthe"ChicagoFederalReserveBank'sNationalActivityIndexforFebruarysentasignalthatarecession[had]probablybegun".[76] ThesharepricesofFannieMaeandFreddieMacplummetedin2008asinvestorsworriedthattheylackedsufficientcapitaltocoverthelossesontheir$5trillionportfolioofloansandloanguarantees.[77]OnJune16,2010,itwasannouncedthatFannieMaeandFreddieMacwouldbedelistedfromtheNewYorkStockExchange;sharesnowtradeontheover-the-countermarket.[78] Housingmarketcorrection[edit] Mainarticle:UnitedStateshousingmarketcorrection ComparisonofthepercentagechangeintheCase-ShillerHomePriceIndexforthehousingcorrectionsintheperiodsbeginningin2005(red)andthe1980s–1990s(blue),comparingmonthlyCSIvalueswiththepeakvaluesimmediatelypriortothefirstmonthofdeclineallthewaythroughthedownturnandthefullrecoveryofhomeprices. NARchiefeconomistDavidLereah'sexplanation,"WhatHappened",fromthe2006NARLeadershipConference[79] BoomendedinAugust2005 Mortgageratesrosealmostonepoint Affordabilityconditionsdeteriorated Speculativeinvestorspulledout Homebuyerconfidenceplunged Resortbuyerswenttosidelines Trade-upbuyerswenttosidelines First-timebuyerspricedoutofmarket BasingtheirstatementsonhistoricU.S.housingvaluationtrends,[1][80]in2005and2006manyeconomistsandbusinesswriterspredictedmarketcorrectionsrangingfromafewpercentagepointsto50%ormorefrompeakvaluesinsomemarkets,[26][81][82][83][84][85]andalthoughthiscoolinghadnotyetaffectedallareasoftheU.S.,somewarnedthatitstillcould,andthatthecorrectionwouldbe"nasty"and"severe".[86][87]ChiefeconomistMarkZandioftheeconomicresearchfirmMoody'sEconomy.compredicteda"crash"ofdouble-digitdepreciationinsomeU.S.citiesby2007–2009.[5][88][89]InapaperhepresentedtoaFederalReserveBoardeconomicsymposiuminAugust2007,YaleUniversityeconomistRobertShillerwarned,"Theexampleswehaveofpastcyclesindicatethatmajordeclinesinrealhomeprices—even50percentdeclinesinsomeplaces—areentirelypossiblegoingforwardfromtodayorfromthenot-too-distantfuture."[90] Tobetterunderstandhowthemortgagecrisisplayedout,a2012reportfromtheUniversityofMichigananalyzeddatafromthePanelStudyofIncomeDynamics(PSID),whichsurveyedroughly9,000representativehouseholdsin2009and2011.Thedataseemstoindicatethat,whileconditionsarestilldifficult,insomewaysthecrisisiseasing:Overtheperiodstudied,thepercentageoffamiliesbehindonmortgagepaymentsfellfrom2.2to1.9;homeownerswhothoughtitwas"verylikelyorsomewhatlikely"thattheywouldfallbehindonpaymentsfellfrom6%to4.6%offamilies.Ontheotherhand,family'sfinancialliquidityhasdecreased:"Asof2009,18.5%offamilieshadnoliquidassets,andby2011thishadgrownto23.4%offamilies."[91][92] Bymid-2016,thenationalhousingpriceindexwas"about1percentshyofthat2006bubblepeak"innominalterms[93]but20%belowininflationadjustedterms.[94] Subprimemortgageindustrycollapse[edit] Mainarticle:Subprimemortgagecrisis BankrunontheU.K.'sNorthernRockBankbycustomersqueuingtowithdrawsavingsinapanicrelatedtotheU.S.subprimecrisis. InMarch2007,theUnitedStates'subprimemortgageindustrycollapsedduetohigher-than-expectedhomeforeclosurerates(noverifyingsource),withmorethan25subprimelendersdeclaringbankruptcy,announcingsignificantlosses,orputtingthemselvesupforsale.[95]Thestockofthecountry'slargestsubprimelender,NewCenturyFinancial,plunged84%amidJusticeDepartmentinvestigations,beforeultimatelyfilingforChapter11bankruptcyonApril2,2007,withliabilitiesexceeding$100million.[96] Themanageroftheworld'slargestbondfund,PIMCO,warnedinJune2007thatthesubprimemortgagecrisiswasnotanisolatedeventandwouldeventuallytakeatollontheeconomyandultimatelyhaveanimpactintheformofimpairedhomeprices.[97]BillGross,a"mostreputablefinancialguru",[10]sarcasticallyandominouslycriticizedthecreditratingsofthemortgage-basedCDOsnowfacingcollapse: AAA?Youwerewooed,Mr.Moody'sandMr.Poor's,bythemakeup,thosesix-inchhookerheels,anda"trampstamp."Manyofthesegood-lookinggirlsarenothigh-classassetsworth100centsonthedollar...[T]hepointisthattherearehundredsofbillionsofdollarsofthistoxicwaste...Thisproblem[ultimately]residesinAmerica'sheartland,withmillionsandmillionsofoverpricedhomes.[10] BusinessWeekhasfeaturedpredictionsbyfinancialanalyststhatthesubprimemortgagemarketmeltdownwouldresultinearningsreductionsforlargeWallStreetinvestmentbankstradinginmortgage-backedsecurities,especiallyBearStearns,LehmanBrothers,GoldmanSachs,MerrillLynch,andMorganStanley.[95]ThesolvencyoftwotroubledhedgefundsmanagedbyBearStearnswasimperiledinJune2007afterMerrillLynchsoldoffassetsseizedfromthefundsandthreeotherbanksclosedouttheirpositionswiththem.TheBearStearnsfundsoncehadover$20billionofassets,butlostbillionsofdollarsonsecuritiesbackedbysubprimemortgages.[98] H&RBlockreportedthatithadmadeaquarterlylossof$677millionondiscontinuedoperations,whichincludedthesubprimelenderOptionOne,aswellaswritedowns,lossprovisionsformortgageloansandthelowerpricesachievableformortgagesinthesecondarymarket.Theunit'snetassetvaluehadfallen21%to$1.1billionasofApril30,2007.[99]TheheadofthemortgageindustryconsultingfirmWakefieldCo.warned,"Thisisgoingtobeameltdownofunparalleledproportions.Billionswillbelost."BearStearnspledgeduptoU.S.$3.2billioninloansonJune22,2007,tobailoutoneofitshedgefundsthatwascollapsingbecauseofbadbetsonsubprimemortgages.[100] PeterSchiff,presidentofEuroPacificCapital,arguedthatifthebondsintheBearStearnsfundswereauctionedontheopenmarket,muchweakervalueswouldbeplainlyrevealed.Schiffadded,"Thiswouldforceotherhedgefundstosimilarlymarkdownthevalueoftheirholdings.IsitanywonderthatWallstreetispullingoutthestopstoavoidsuchacatastrophe?...Theirtrueweaknesswillfinallyrevealtheabyssintowhichthehousingmarketisabouttoplummet."[101]TheNewYorkTimesreportconnectsthehedgefundcrisiswithlaxlendingstandards:"ThecrisisthisweekfromthenearcollapseoftwohedgefundsmanagedbyBearStearnsstemsdirectlyfromtheslumpinghousingmarketandthefalloutfromlooselendingpracticesthatshoweredmoneyonpeoplewithweak,orsubprime,credit,leavingmanyofthemstrugglingtostayintheirhomes."[100] OnAugust9,2007,BNPParibasannouncedthatitcouldnotfairlyvaluetheunderlyingassetsinthreefundsbecauseofitsexposuretoU.S.subprimemortgagelendingmarkets.[102]Facedwithpotentiallymassive(thoughunquantifiable)exposure,theEuropeanCentralBank(ECB)immediatelysteppedintoeasemarketworriesbyopeninglinesof€96.8billion(U.S.$130billion)oflow-interestcredit.[103]OnedayafterthefinancialpanicaboutacreditcrunchhadsweptthroughEurope,theU.S.FederalReserveBankconductedan"openmarketoperation"toinjectU.S.$38billionintemporaryreservesintothesystemtohelpovercometheilleffectsofaspreadingcreditcrunch,ontopofasimilarmovethepreviousday.[citationneeded]InordertofurthereasethecreditcrunchintheU.S.creditmarket,at8:15 a.m.onAugust17,2007,thechairmanoftheFederalReserveBankBenBernankedecidedtolowerthediscountwindowrate,whichisthelendingratebetweenbanksandtheFederalReserveBank,by50basispointsto5.75%from6.25%.TheFederalReserveBankstatedthattherecentturmoilintheU.S.financialmarketshadraisedtheriskofaneconomicdownturn. Inthewakeofthemortgageindustrymeltdown,SenatorChrisDodd,chairmanoftheBankingCommittee,heldhearingsinMarch2007inwhichheaskedexecutivesfromthetopfivesubprimemortgagecompaniestotestifyandexplaintheirlendingpractices.Doddsaidthat"predatorylendingpractices"wereendangeringhomeownershipformillionsofpeople.[17]Inaddition,DemocraticsenatorssuchasSenatorCharlesSchumerofNewYorkwerealreadyproposingafederalgovernmentbailoutofsubprimeborrowerslikethebailoutmadeinthesavingsandloancrisis,inordertosavehomeownersfromlosingtheirresidences.Opponentsofsuchaproposal[who?]assertedthatagovernmentbailoutofsubprimeborrowerswasnotinthebestinterestsoftheU.S.economybecauseitwouldsimplysetabadprecedent,createamoralhazard,andworsenthespeculationprobleminthehousingmarket. LouRanieriofSalomonBrothers,creatorofthemortgage-backedsecuritiesmarketinthe1970s,warnedofthefutureimpactofmortgagedefaults:"Thisistheleadingedgeofthestorm...Ifyouthinkthisisbad,imaginewhatit'sgoingtobelikeinthemiddleofthecrisis."Inhisopinion,morethan$100billionofhomeloanswerelikelytodefaultwhentheproblemsseeninthesubprimeindustryalsoemergeintheprimemortgagemarkets.[104] FormerFederalReserveChairmanAlanGreenspanhadpraisedtheriseofthesubprimemortgageindustryandthetoolswhichitusestoassesscredit-worthinessinanApril2005speech.[105]Becauseoftheseremarks,aswellashisencouragementoftheuseofadjustable-ratemortgages,Greenspanhasbeencriticizedforhisroleintheriseofthehousingbubbleandthesubsequentproblemsinthemortgageindustrythattriggeredtheeconomiccrisisof2008.[106][107]OnOctober15,2008,AnthonyFaiola,EllenNakashimaandJillDrewwrotealengthyarticleintheWashingtonPosttitled,"WhatWentWrong".[108]Intheirinvestigation,theauthorsclaimthatGreenspanvehementlyopposedanyregulationoffinancialinstrumentsknownasderivatives.TheyfurtherclaimthatGreenspanactivelysoughttounderminetheofficeoftheCommodityFuturesTradingCommission,specificallyundertheleadershipofBrooksleyE.Born,whentheCommissionsoughttoinitiatetheregulationofderivatives.Ultimately,itwasthecollapseofaspecifickindofderivative,themortgage-backedsecurity,thattriggeredtheeconomiccrisisof2008.Concerningthesubprimemortgagemess,Greenspanlateradmittedthat"Ireallydidn'tgetituntilverylatein2005and2006."[34] OnSeptember13,2007,theBritishbankNorthernRockappliedtotheBankofEnglandforemergencyfundsbecauseofliquidityproblemsrelatedtothesubprimecrisis.[109]ThisprecipitatedabankrunatNorthernRockbranchesacrosstheUKbyconcernedcustomerswhotookout"anestimated£2bnwithdrawninjustthreedays".[110] Seealso[edit] 2010UnitedStatesforeclosurecrisis Financialcrisisof2007–08 GreatRecession MortgageElectronicRegistrationSystems SyntheticCDO Realestatetrend Notes[edit] ^abcdShiller,Robert(2005).IrrationalExuberance(2d ed.).PrincetonUniversityPress.ISBN 978-0-691-12335-6. ^"S&PCoreLogicCase-ShillerHomePriceIndices-S&PDowJonesIndices".standardandpoors.com.ArchivedfromtheoriginalonMay22,2013.RetrievedOctober5,2017. ^Mantell,Ruth."Homepricesoffrecord18%inpastyear,Case-Schillersays".marketwatch.com.RetrievedApril29,2009. 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^abc"WhenmainstreamanalystscompareCDOsto'subslime','toxicwaste'and'six-inchhookerheels'..."RGEMonitor.June27,2007.ArchivedfromtheoriginalonJune29,2007. ^Solomon,Deborah(August31,2007)."BushMovestoAidHomeowners".TheWallStreetJournal. ^Reuters.(2008).FACTBOX–U.S.governmentbailouttallytops504billionpounds. ^abcWisconsinSchoolofBusiness&TheLincolnInstituteofLandPolicy(2015)."LandPricesfor46MetroAreas".UpdatedQuarterly.{{citeweb}}:|last1=hasgenericname(help) ^TaxBreakMayHaveHelpedCauseHousingBubble,TheNewYorkTimes,December18,2008 ^Evans-Pritchard,Ambrose(March23,2006)."Nomercynow,nobail-outlater".TheDailyTelegraph.London.ArchivedfromtheoriginalonJune15,2006.RetrievedMay26,2010.[T]heAmericanhousingboomisnowthemotherofallbubbles—insheervolume,ifnotindegreesofspeculativemadness. ^Levenson,Eugenia(March15,2006)."LoweringtheBoom?SpeculatorsGoneMild".Fortune.Americawasawashinastark,ravingfrenzythatlookedeverybitascrazyasdot-comstocks. 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^"Housingmarketmaybeonice,buttheblamemarketisredhot".ChicagoTribune.September10,2006.ArchivedfromtheoriginalonJanuary13,2009. ^Howley,Kathleen(June14,2007)."U.S.MortgagesEnterForeclosureatRecordPace".BloombergNews. ^"Greenspan:'Localbubbles'buildinhousingsector".USAToday.May20,2005. ^"S&P/Case-ShillerHomePriceIndices-historicalspreadsheets". ^abChristie,Les(August14,2007)."Californiacitiesfilltop10foreclosurelist".CNNMoney.com.RetrievedMay26,2010. ^"Homepricestumbleasconsumerconfidencesinks".Reuters.November27,2007.RetrievedMarch17,2008. ^Knox,Noelle(November21,2006)."Cleveland:Foreclosuresweighonmarket".USAToday. ^Lynch,Sharon(October2,2008)."MetroU.S.HomePricesFallonHigherForeclosures".Bloomberg.RetrievedOctober10,2008. ^"NumberofStoriesinNewOne-FamilyHousesSold"(PDF). ^"D.R.Horton,Inc.(DHI)StockHistoricalPrices&Data-YahooFinance".finance.yahoo.com. ^"PulteCorp.2006AnnualReport".ArchivedfromtheoriginalonAugust19,2007. ^"PulteCorp.1996Form10-K–Annualreport". ^"SourcesandUsesofEquityExtractedfromHomes"(PDF). ^"America'sUnsustainableBoom".MisesInstitute.November5,2004. ^"LOUDOUNCOUNTYPOPULATION:2017ESTIMATESERIES".LoudounCounty,Virginia.October2017.RetrievedAugust28,2018.[deadlink] ^"BureauofEconomicAnalysisGDPestimate,Q22007"(PDF)(Pressrelease).July27,2007.Archivedfromtheoriginal(PDF)onMay2,2017.RetrievedMarch24,2008. ^"ChicagoFedindexindicatesrecessionhasprobablybegun".Forbes.ThomsonFinancial.March24,2008.ArchivedfromtheoriginalonMay14,2008.RetrievedMarch24,2008. ^Grynbaum,MichaelM.(July12,2008)."WoesatLoanAgenciesandOil-PriceSpikeRoilMarkets".RetrievedOctober5,2017–vianytimes.com. ^"Fannie,FreddieDelistingSignalsFirmsHaveNoValue".WallStreetJournal.June16,2010.ArchivedfromtheoriginalonJune21,2010. ^ Lereah,David(August17,2006)."RealEstateRealityCheck(Powerpointtalk)".NationalAssociationofRealtorsLeadershipSummit.Archivedfromtheoriginal(Powerpoint)onSeptember1,2006.RetrievedAugust28,2006. CondominiumPriceAppreciation(percentages)inthesouthandwestUnitedStates,2002–2006.(Source:NAR.) ^Baker,Dean(July27,2004)."Thebubblequestion".CNNMoney.com.Therehasneverbeenarunupinhomepriceslikethis. ^Searjeant,Graham(August27,2005)."USheadingforhousepricecrash,Greenspantellsbuyers".TheTimes.London.RetrievedMay26,2010.AlanGreenspan,theUnitedStates'scentralbanker,warnedAmericanhomebuyersthattheyriskacrashiftheycontinuetodrivepropertypriceshigher...Ontraditionaltests,aboutathirdofU.S.localhomesmarketsarenowmarkedlyoverpriced. ^Zweig,Jason(May8,2006)."Buffett:Realestateslowdownahead".CNNMoney.com.Onceapricehistorydevelops,andpeoplehearthattheirneighbormadealotofmoneyonsomething,thatimpulsetakesover,andwe'reseeingthatincommoditiesandhousing...Orgiestendtobewildesttowardtheend.It'slikebeingCinderellaattheball.Youknowthatatmidnighteverything'sgoingtoturnbacktopumpkinsandmice.Butyoulookaroundandsay,'onemoredance,'andsodoeseveryoneelse.Thepartydoesgettobemorefun—andbesides,therearenoclocksonthewall.Andthensuddenlytheclockstrikes12,andeverythingturnsbacktopumpkinsandmice. ^"SurvivingaReal-EstateSlowdown".TheWallStreetJournal.July5,2006.Asignificantdeclineinpricesiscoming.Ahugebuildupofinventoriesistakingplace,andthenwe'regoingtoseeamajor[retrenchment]inhotmarketsinCalifornia,Arizona,FloridaanduptheEastCoast.Thesemarketscouldfall50%fromtheirpeaks. ^"SurvivingRealEstateSlowdown".Seek.estate.June1,2014.[permanentdeadlink] ^"BubbleBlog".Newsweek.August8,2006.ArchivedfromtheoriginalonAugust22,2006. ^Krugman,Paul(January2,2006)."Nobubbletrouble?".TheNewYorkTimes.[T]heoverallmarketvalueofhousinghaslosttouchwitheconomicreality.Andthere'sanastycorrectionahead. ^"Housingbubblecorrectioncouldbesevere".USNews&WorldReport.June13,2006.ArchivedfromtheoriginalonJuly4,2007. ^"Studysees'07'crash'insomehousing".ChicagoTribune.October5,2006.ArchivedfromtheoriginalonJanuary14,2009. ^Clabaugh,Jeff(October2,2006)."Moody'spredictsbigdropinWashingtonhousingprices".WashingtonBusinessJournal. ^"TwotopUSeconomistspresentscaryscenariosforUSeconomy;Housepricesinsomeareasmayfallasmuchas50%–Housingcontractionthreatensabroaderrecession".FinfactsIreland.September3,2007.Theexampleswehaveofpastcyclesindicatethatmajordeclinesinrealhomeprices—even50percentdeclinesinsomeplaces—areentirelypossiblegoingforwardfromtodayorfromthenot-too-distantfuture. ^"MortgageDistressandFinancialLiquidity:HowU.S.FamiliesareHandlingSavings,MortgagesandOtherDebts".JournalistsResource.org,retrievedJune18,2012 ^Stafford,Frank;Chen,Bing;Schoeni,Robert(2012)."MortgageDistressandFinancialLiquidity:HowU.S.FamiliesareHandlingSavings,MortgagesandOtherDebts"(PDF).InstituteforSocialResearch.Archivedfromtheoriginal(PDF)onMay11,2013.{{citejournal}}:Citejournalrequires|journal=(help) ^DianaOlick(August29,2016)."We'reinanewhousingbubble:Whyit'slessscarythistime".CNBC. ^"Americanhouseprices:realtycheck".TheEconomist.August24,2016. ^ab"TheMortgageMessSpreads".BusinessWeek.March7,2007. ^"NewCenturyFinancialfilesforChapter11bankruptcy".MarketWatch.April2,2007. ^"PIMCO'sGross".CNNMoney.com.June27,2007.[deadlink] ^"MerrillsellsoffassetsfromBearhedgefunds".Reuters.June21,2007. ^"H&RBlockstruckbysubprimeloss".FinancialTimes.June21,2007. ^abCreswell,Julie;Bajaj,Vikas(June23,2007)."$3.2BillionMovebyBearStearnstoRescueFund".TheNewYorkTimes.RetrievedMay26,2010. ^Wines,Leslie(June21,2007)."BearStearnsHedgeFundWoesStirWorryInCDOMarket".MarketWatch. ^"BNPParibasInvestmentPartnerstemporallysuspendsthecalculationoftheNetAssetValueofthefollowingfunds:ParvestDynamicABS,BNPParibasABSEURIBORandBNPParibasABSEONIA"(Pressrelease).August9,2007. ^Kanter,James;Werdigier,Julia(August9,2007)."BigFrenchBankSuspendsFunds".TheNewYorkTimes.RetrievedMay26,2010. ^"Next:Therealestatemarketfreeze".MSNMoney.March12,2007.ArchivedfromtheoriginalonAugust14,2014.RetrievedApril10,2007. ^AlanGreenspan(April4,2005)."RemarksbyChairmanAlanGreenspan,ConsumerFinanceAttheFederalReserveSystem'sFourthAnnualCommunityAffairsResearchConference,Washington,D.C."FederalReserveBoard. ^StephenRoach(March16,2007)."TheGreatUnraveling".MorganStanley.Inearly2004,heurgedhomeownerstoshiftfromfixedtofloatingratemortgages,andinearly2005,heextolledthevirtuesofsubprimeborrowing—theextensionofcredittounworthyborrowers.Farfromtheheartlesscentralbankerthatissupposedto'takethepunchbowlawayjustwhenthepartyisgettinggood,'AlanGreenspanturnedintoanunabashedcheerleaderfortheexcessesofanincreasinglyasset-dependentU.S.economy.IfearhistorywillnotjudgetheMaestro'slegacykindly. ^NourielRoubini(March19,2007)."WhoistoBlamefortheMortgageCarnageandComingFinancialDisaster?UnregulatedFreeMarketFundamentalismZealotry".RGEMonitor.ArchivedfromtheoriginalonJuly5,2007. ^"WhatWentWrong".October15,2008–viawashingtonpost.com. ^"NorthernRockasksforBankhelp".BBCNews.September13,2007. ^"BanksremainunderfireinLondon".FinancialTimes.September17,2007. Furtherreading[edit] Booksandbookchapters[edit] JuneFletcher(2005),HousePoor:PumpedUpPrices,RisingRates,andMortgagesonSteroid–HowtoSurvivetheComingHousingCrisis,NewYork:Collins.ISBN 0-06-087322-1. FredE.Foldvary(2007),TheDepressionof2008,Berkeley:TheGutenbergPress.ISBN 0-9603872-0-X. Koller,CynthiaA.(2012)."WhiteCollarCrimeinHousing:MortgageFraudintheUnitedStates."ElPaso,TX:LFBScholarly.ISBN 1593325347.ISBN 978-1593325343 Patterson,LauraA.,&Koller,CynthiaA.Koller(2011)."DiffusionofFraudThroughSubprimeLending:ThePerfectStorm."InMathieuDeflem(ed.)EconomicCrisisandCrime(SociologyofCrimeLawandDeviance,Volume16),EmeraldGroupPublishingLimited,pp. 25–45. JohnR.Talbott(2006).SellNow!:TheEndoftheHousingBubble,NewYork:St.Martin'sGriffin.ISBN 0-312-35788-5. JohnR.Talbott(2003).TheComingCrashintheHousingMarket,NewYork:McGraw-Hill.ISBN 0-07-142220-X. ElizabethWarrenandAmeliaWarrenTyagi(2003).TheTwo-IncomeTrap:WhyMiddle-ClassMothersandFathersAreGoingBroke,NewYork:BasicBooks.ISBN 0-465-09082-6. Articles[edit] "Hearthathissingsound?".TheEconomist.December8,2005. "Afterthefall".TheEconomist.June16,2005. "Incomethewaves".TheEconomist.June16,2005. "Willthewallscomefallingdown?".TheEconomist.April20,2005. "Stillwanttobuy?".TheEconomist.May3,2005. "TheAmericaneconomy:Aphoneyrecovery".TheEconomist.February26,2004. "Houseofcards".TheEconomist.May29,2003. "Goingthroughtheroof".TheEconomist.May28,2002. Fackler,Martin(December25,2005)."TakeItFromJapan:BubblesHurt".TheNewYorkTimes.RetrievedMay26,2010. JuneFletcher(February10,2006)."IsthePartyReallyOverFortheHousingBoom?".TheWallStreetJournal. DeanBaker(July2005)."TheHousingBubbleFactSheet"(PDF).CenterforEconomicandPolicyResearch.Archivedfromtheoriginal(PDF)onFebruary3,2007. FredE.Foldvary(1997),"TheBusinessCycle:AGeorgist-AustrianSynthesis,"AmericanJournalofEconomicsandSociology56(4):521–41,October. N.GregoryMankiwandDavidN.Weil(1989)."Thebabyboom,thebabybust,andthehousingmarket",RegionalScienceandUrbanEconomics,Vol.19,No.2,May1989,pp. 235–258. PaulKrugman(August25,2006)."HousingGetsUgly".TheNewYorkTimes. RobertJ.Samuelson(October11,2006)."HomeIsWheretheWorryIs".TheWashingtonPost. "America'sRentalHousing:TheKeytoaBalancedNationalPolicy",JointCenterforHousingStudies,HarvardUniversity,2007 "FromBubbletoDepression?",StevenGjerstadandVernonL.Smith,WallStreetJournal,April6,2009,includescharts "MiredinDisequilibrium",VernonL.Smith,Newsweek,January24,2011 Externallinks[edit] CenterforEconomicandPolicyResearch–CEPRregularlyreleasesreportsontheU.S.HousingBubble. vteGreatRecessionByregion Africa Americas UnitedStates SouthAmerica Asia Europe Oceania UnitedStates-specific Automotiveindustrycrisis Californiabudgetcrisis Housingbubble Housingmarketcorrection Subprimemortgagecrisis Bankinglossesandfraud Liborscandal TomHayes SociétéGénéraletradingloss Forexscandal BernieMadoff TomPetters ScottW.Rothstein AllenStanford Governmententities ConsumerFinancialProtectionBureau FederalDepositInsuranceCorporation FederalHomeLoanBanks FederalHousingAdministration FederalHousingFinanceAgency FederalHousingFinanceBoard FederalReserveSystem GovernmentNationalMortgageAssociation NationalAssetManagementAgency OfficeofFederalHousingEnterpriseOversight OfficeofFinancialStability UKFinancialInvestments GovernmentpolicyandspendingresponsesBankingandfinancestabilityandreform Banking(SpecialProvisions)Act2008 China–Japan–SouthKoreatrilateralsummit CommercialPaperFundingFacility Dodd–FrankWallStreetReformandConsumerProtectionAct EmergencyEconomicStabilizationActof2008 Irishemergencybudget,2009 TemporaryLiquidityGuaranteeProgram TermAsset-BackedSecuritiesLoanFacility TroubledAssetReliefProgram 2008UnitedKingdombankrescuepackage Bankstresstests EU U.S. Stimulusandrecovery 2008EuropeanUnionstimulusplan 2008–2009Keynesianresurgence AmericanRecoveryandReinvestmentActof2009 Chineseeconomicstimulusprogram EconomicStimulusActof2008 FraudEnforcementandRecoveryActof2009 GreenNewDeal HousingandEconomicRecoveryActof2008 NationalfiscalpolicyresponsetotheGreatRecession Zerointerest-ratepolicy Governmentinterventions,rescues,andacquisitions ListofbanksacquiredorbankruptedduringtheGreatRecession Non-banking Chrysler GeneralMotors Securitiesinvolvedandfinancialmarkets Auctionratesecurities Collateralizeddebtobligations Collateralizedmortgageobligations Creditdefaultswaps Mortgage-backedsecurities Secondarymortgagemarket Socialresponses TeaPartyprotests(UnitedStates;c.2009) 2009MayDayprotests(Europe,MiddleEastandNorthAfrica,Asia;2009) Occupymovement(worldwide) Relatedtopics 2000senergycrisis 2008CentralAsiaenergycrisis EffectsoftheGreatRecessiononmuseums Declineofnewspapers 2007–2008worldfoodpricecrisis Retailapocalypse Europeandebtcrisis Financialcrisisof2007–2008 Listofcountriesbypublicdebt vteU.S.subprimemortgagecrisisBackground /timeline Backgroundinformation Impacttimeline Causes UnitedStateshousingbubble /housingmarketcorrection Roleofcreditratingagencies Governmentpolicies Impacts Financialcrisisof2007–2008 GreatRecession Writedowns Indirecteconomiceffects Responses EconomicStimulusActof2008 HousingandEconomicRecoveryActof2008 EmergencyEconomicStabilizationActof2008 Dodd–FrankWallStreetReformandConsumerProtectionAct Acquiredorbankruptbanksinthelate2000sfinancialcrisis CapitalAssistanceProgram CapitalPurchaseProgram FederalReserveresponses FederaltakeoverofFannieMaeandFreddieMac Governmentintervention HomeownersAffordabilityandStabilityPlan HopeNowAlliance Loanmodification Public–PrivateInvestmentProgramforLegacyAssets Regulatoryresponses PrimaryDealerCreditFacility 2009SupervisoryCapitalAssessmentProgram TeaPartyprotests TermAsset-BackedSecuritiesLoanFacility TroubledAssetReliefProgram WallStreetreform Relatedtopics Erroraccounts FinancialpositionoftheUnitedStates Foreclosurerescuescheme Propertyderivatives vteFinancialbubbles Bullmarket Commoditybooms Creditcycle Diamondrush Goldrush Irrationalexuberance Oilboom Realestatebubble Stockmarketbubble 1000–1760 Tulipmania(1634–1637) Mississippibubble(1684–1720) BrazilianGoldRush(c.1690–1760) SouthSeabubble(1711–1720) BengalBubbleof1769(1757–1760) 1760–1840 BengalBubbleof1769(1760–1769) BrazilianGoldRush(1760–1840) CanalMania(c.1790–c.1810) CarolinaGoldRush(1802–1825) 1810sAlabamarealestatebubble GeorgiaGoldRush(1828–c.1840) 1830sChicagorealestatebubble Chileansilverrush(1830–1840) 1840–1870 Chileansilverrush(1840–1850) RailwayMania(c.1840–c.1850) BrazilianGoldRush(1840–1870) CaliforniaGoldRush(1848–1855) QueenCharlottesGoldRush(1851) Victoriangoldrush(1851–c.1870) NewSouthWalesgoldrush(1851–1880) Australiangoldrushes(1851–1914) FraserCanyonGoldRush(1858) Pike'sPeakGoldRush(1858–1861) RockCreekGoldRush(1859) Pennsylvaniaoilrush(1859–1891) SimilkameenGoldRush(1860) StikineGoldRush(1861) ColoradoRiverminingboom(1861–1864) OtagoGoldRush(1861–1864) CaribooGoldRush(1861–1867) FirstNovaScotiaGoldRush(1861–1874) WildHorseCreekGoldRush(1864–1865) LeechtownGoldRush(1864–1865) WestCoastGoldRush(1864–1867) BigBendGoldRush(c.1865) VermilionLakeGoldRush(1865–1867) KildonanGoldRush(1869) OminecaGoldRush(1869) 1870–1914 1870sLaplandgoldrush CoromandelGoldRushes(c.1870–c.1890) CassiarGoldRush(c.1870–c.1890) BrazilianGoldRush(1870–c.1900) BlackHillsGoldRush(1874–1880) ColoradoSilverBoom(1879–1893) WesternAustraliangoldrushes(c.1880–c.1900) Indianagasboom(c.1880–1903) Ohiooilrush(c.1880–c.1930) TierradelFuegogoldrush(1883–1906) CayooshGoldRush(1884) WitwatersrandGoldRush(1886) Encilhamento(1886–1890) CrippleCreekGoldRush(c.1890–c.1910) KlondikeGoldRush(1896–1899) SecondNovaScotiaGoldRush(1896–1903) KobukRiverStampede(1897–1899) MountBakerGoldRush(1897–c.1925) NomeGoldRush(1899–1909) FairbanksGoldRush(c.1900–1918) Texasoilboom(1901–1918) Cobaltsilverrush(1903–1918) PorcupineGoldRush(1909–1918) 1918–1939 1920sFloridalandboom(c.1920–1925) FairbanksGoldRush(1918–c.1930) Texasoilboom(1918–1945) Cobaltsilverrush(1918–c.1930) PorcupineGoldRush(1918–1945) 1930sKakamegagoldrush ThirdNovaScotiaGoldRush(1932–1942) 1945–1973 Texasoilboom(1945–c.1950) PorcupineGoldRush(1945–c.1960) Poseidonbubble(1969–1970) 1973–1982 Mexicanoilboom(1977–1981) SilverThursday(1980) NewZealandpropertybubble(c.1980–1982) 1982–2007 1980soilglut NewZealandpropertybubble(1982–) Spanishpropertybubble(1985–2008) Japaneseassetpricebubble(1986–1990) Dot-combubble(1995–2000) Balticstateshousingbubble(2000–2006) Irishpropertybubble(c.2000–2007) 2000scommoditiesboom(2000–2008) 2000sDanishpropertybubble(2001–2006) Indianpropertybubble(2001–2007) UnitedStateshousingbubble(2002–2006) Romanianpropertybubble(2002–2007) Polishpropertybubble(2002–2008) Canadianpropertybubble(2002–) Chinesepropertybubble(2005–11) Lebanesehousingbubble(2005–2008) Bulgarianpropertybubble(2006–2008) NorthDakotaoilboom(2006–2008) Chinesestockbubbleof2007 Uraniumbubbleof2007 2007–present NorthDakotaoilboom(2008–2012) 2000scommoditiesboom(2008–2014) Lebanesehousingbubble(2008–) Corporatedebtbubble(2008–) Australianpropertybubble(2010–) Cryptocurrencybubble(2011–) Everythingbubble(2020–) AIwinter Carbonbubble Chaoticbubble TheGreenBubble Socialmediastockbubble Unicornbubble U.S.highereducationbubble vteRealestate Property Tertiarysectoroftheeconomy Bylocation Bangladesh China Italy Kenya Pakistan Panama PuertoRico Russia UnitedKingdom Types Commercialproperty Commercialbuilding CorporateRealEstate Extraterrestrialrealestate Internationalrealestate Leaseadministration Nicherealestate Gardenrealestate Healthcarerealestate Vacationproperty Arableland Golfproperty Luxuryrealestate Off-planproperty Privateequityrealestate Realestateowned Residentialproperty Sectors Propertymanagement Realestatedevelopment Realestateinvesting Realestateflipping Relocation Lawandregulation Adversepossession Chainoftitle Closing Concurrentestate Conditionalsale Conveyancing Deed Eminentdomain Encumbrance Foreclosure Landlaw Landregistration Leaseholdestate Lease Propertyabstract Realestatetransaction Realestatecontract Realproperty Rentregulation Severance Torrenstitle Zoning Economics,financingandvaluation Asset-basedlending Capitalizationrate Effectivegrossincome Grossrentmultiplier Hardmoneyloan Highestandbestuse Homeequityloan Investmentratingforrealestate Mortgageinsurance Mortgageloan Realestatederivative Realestateeconomics Realestatebubble Realestatevaluation Remortgage Rentalvalue Parties Appraiser Buyeragent Buyerbroker CharteredSurveyor Exclusivebuyeragent Landbanking Landlord Movingcompany Propertymanager Realestatebroker Realestateinvestmentclub Realestateinvestmenttrust Realpropertyadministrator Tenant Other Companies Eviction Gentrification Graduaterealestateeducation Greenbelt Indices Industrytradegroups Landbanking People Propertycycle Realestatetrends Undergraduaterealestateprograms Urbandecay Urbanplanning Listofhousingmarketsbyrealestateprices  Category  Commons  Listoftopics Retrievedfrom"https://en.wikipedia.org/w/index.php?title=United_States_housing_bubble&oldid=1087565390" 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