17, 2001, the first trading after the September 11 attack.Īccording to a report by NCBI, between 2007-2011 one fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. In fact, the major financial markets lost more than 30% of their value by September 2008, when the Dow Jones Industrial Average fell 777.68 points, which surprised 684.81 loss on Sept. The stock market crash led to many losing their wealth caused by the increasing number of closures and housing busts. Even after the Federal reserve cutting down the interest rates, it wasn’t enough to stop the bleeding economy (the panic). On the other hand, banks stopped lending to each other in fear of being trapped with subprime mortgages.
Leaving huge collateral of subprime mortgages. Many banks seized the opportunity for a lucrative long-term benefit. The rise of Mortgage-Backed Securities (MBS) led to financial institutions extending their mortgage lending. This led to more inventory availability, and subsequently, a crash followed suit. A total of 861,664 families lost their homes to foreclosure that year. In 2008, the number of foreclosures spiked to a record high of 81%, according to a CNN report. Plunged into unforeseeable debt, many defaulted, leading to a huge rise in foreclosures in the housing market. While those with conventional type of loan weren’t affected, the majority with Adjustable-Rate Mortgage (ARM) were the casualties. On the other hand, the Federal Reserve Bank raised the interest rate to 5.6 percent by June 2006. The high demand in the housing market propelled an increase in risky mortgage lending practices. The rise of Mortgage-Backed Securities (MBS) was hugely misunderstood by many investors. The easing of lending standards created an opening for many to access mortgages. In the early-to-mid 2000s, mortgage lenders revised their lending standards of a desirable borrower which opened a window to borrowers with poor credit to get access to loans and secure home purchase. Housing prices shoot through the roof, with speculative buyers flooding the market, leading to a demand exceeding supply. Housing Prices and ForeclosuresĪ similar event like the one happening now ruled prior to the market crash in 2008. Here’s what preceded the great recession in 2008. The sole reason for the crash and financial crisis were down to predatory private mortgage lending and unregulated markets. The housing market crash 15 years ago ignited a worldwide recession. What Caused the Housing Market Crash 2008? Speculations are rampant about how when the real estate markets could crash - but first, what can we learn from the 2008 housing market crash? Here are some interesting facts about the events preceding the crash back then.
Many are anticipating history to repeat itself, just like the 2008 housing market crash. Recently, Google reported that the search “When is the housing market going to crash?” had spiked 2,450% in the past month. Mobile homes for sale (tyrone woods) might just be the potential fix to the American housing shortage going by the fact they take a shorter time to build than site-built homes. It’s crystal clear demand is outpacing supply what next? Could the mobile and modular homes be the fix? However, that has skyrocketed the house prices. Real estate is experiencing record low-interest rates that make housing affordable. The Real Estate Market Crash is Coming Sooner Than You ThinkĪlways - fueled by a rapid increase in home prices, a rising housing demand, and home flippers - the market then crashes. And why is that so? Because when the last time the housing market sored like this - it sparked a great recession that left many in financial ruins. Everyone jostled by the news the housing market could crash has every reason to be worried.
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