United States housing bubble
1920610
225821003
2008-07-15T15:41:05Z
216.58.163.165
The suburbs of chicago saw low single digit appreciation from 2000-2005. Nowhere near bubble level.
{{intro-toolong}}
[[Image:Time Magazine June 13 2005 Cover.jpg|thumb|200px|right|''Home $weet Home'': cover of the June 13, 2005 issue of ''[[Time (magazine)|Time]]'' magazine<ref name="Time magazine cover">
{{cite news
|title=Home $weet Home |work=[[Time (magazine)|Time]]
|date=2005-06-13
|url=http://www.time.com/time/magazine/0,9263,7601050613,00.html
}}
</ref> illustrating the [[United States housing bubble#Mania for home ownership|mania]]<ref name="Moyers Morgenson">{{cite episode |series=Bill Moyers Journal |title=In Washington, big business and big money are writing the rules on trade... |transcripturl=http://www.pbs.org/moyers/journal/06292007/transcript5.html |airdate=2007-06-29 |network=[[PBS]] }}</ref> for home buying. The appearance of this cover was taken as a sign of the bubble's peak.<ref name="Forbes Time cover">
{{cite news
|title=The Pin that Bursts the Housing Bubble |work=[[Forbes]]
|date=2005-07-21
|url=http://www.forbes.com/investmentnewsletters/2005/07/21/lennar-hovnanian-kb-cz_ags_0721soapbox_inl.html
|accessdate=2008-03-17
}}
</ref>
]]
The '''United States housing bubble''' is an [[economic bubble]] in many parts of the [[United States|U.S.]] [[real estate|housing market]] including areas of [[California]], [[Florida]], [[New York]], [[Michigan]], the [[BosWash|BosWash megalopolis]], and the [[Southwestern United States|Southwest]] markets. On a national level, housing prices peaked in early 2005, began declining in 2006 and have not yet bottomed. Increased [[foreclosure]] rates in 2006–2007 by U.S. homeowners led to a [[Subprime mortgage crisis|crisis]] in August 2007 for the [[Subprime mortgage|subprime]], [[Subprime mortgage crisis|Alt-A]], [[Collateralized debt obligation|CDO]], [[Collateralized debt obligation|CDX]], [[mortgage]], [[Fixed income|credit]], [[Hedge funds|hedge fund]], and [[foreign bank]] markets.<ref name="Moyers
Morgenson">{{cite episode |series=Bill Moyers Journal |title=In Washington, big business and big money are writing the rules on trade... |transcripturl=http://www.pbs.org/moyers/journal/06292007/transcript5.html |airdate=2007-06-29 |network=[[PBS]] }}</ref> The U.S. Treasury Secretary called the bursting housing bubble "the most significant risk to our economy."<ref name="Paulson 2007-10-17">{{cite news |title=Housing woes take bigger toll on
economy than expected: Paulson |date=2007-10-17 |work=[[Agence France-Presse|AFP]] |url=http://afp.google.com/article/ALeqM5hWSjWmGJ4YXTh3PM5kOC7csTT48g }}</ref>
Housing bubbles may occur in local or global real estate markets. They are typically characterized, in their late stages, by rapid increases in the [[real estate appraisal|valuations]] of [[real property]] until unsustainable levels are reached relative to incomes, [[Housing bubble#Housing ownership and rent measures|price-to-rent ratios]], and other economic indicators of affordability. This may be followed by decreases in home prices that can result in many owners holding [[negative equity]]—a [[mortgage]] debt higher than the value of the property. The underlying causes of the housing bubble are complex; factors include historically-low interest rates, lax lending standards, and a speculative fever.<ref name="Moyers Morgenson"/><ref name="WeekStd bubble trouble"/><ref name="UK Telegraph speculative madness">{{cite news |title=No mercy now, no bail-out later |work=[[The Daily Telegraph]] |date=2006-03-23 |url=http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/03/23/ccfed23.xml&menuId=242&sSheet=/money/2006/03/23/ixcoms.html |quote=[T]he American housing boom is now the mother of all bubbles—in sheer volume, if not in
degrees of speculative madness. }}</ref><ref name="Fortune frenzy">{{cite news |title=Lowering the Boom? Speculators Gone Mild |date=2006-03-15 |work=[[Fortune (magazine)|Fortune]] |url=http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371785/index.htm | quote=America was awash in a stark,
raving frenzy that looked every bit as crazy as dot-com stocks. }}</ref><ref name="Reuters Dodd"/> This bubble may be related to the [[stock-market bubble|stock market]] or [[dot-com bubble]] of the 1990s.<ref name="IE2"/><ref name="Fed lowers rates 11 times">{{cite web |url=http://www.federalreserve.gov/fomc/fundsrate.htm |title=Intended federal funds rate, Change and level, 1990 to present }}</ref><ref name="Barron's BNH1">{{cite news |last=Shiller|first=Robert |title=The Bubble's New Home | work=[[Barron's Magazine|Barron's]] |date=2005-06-20 |url=http://online.barrons.com/article/SB111905372884363176.html |quote=The home-price bubble feels like the stock-market mania in the fall of 1999, just before the stock bubble burst in early 2000, with all the hype, herd investing and absolute confidence in the inevitability of continuing price
appreciation. My blood ran slightly cold at a cocktail party the other night when a recent Yale Medical School graduate told me that she was buying a condo to live in Boston during her year-long internship, so that she could flip it for a profit next year. [[Tulipmania]] reigns. }} Plot of inflation-adjusted home price appreciation in several U.S. cities, 1990–2005:
{| align="center"
|-
| [[Image:Barrons BubblesNewHome.png|right|140px|thumb|Plot of inflation-adjusted home price appreciation in several U.S. cities, 1990–2005.]]
|}</ref><ref name="BW burst">{{cite news |title=Is A Housing Bubble About To Burst? |work=[[BusinessWeek]] |date=2004-07-19 |url=http://www.businessweek.com/magazine/content/04_29/b3892064_mz011.htm |accessdate=2008-03-17}}</ref><ref name="Shiller Barron's">{{cite news |last=Shiller|first=Robert |title=The Bubble's New Home |work=[[Barron's Magazine|Barron's]] |date=2005-06-20 |url=http://online.barrons.com/article/SB111905372884363176.html |quote=Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors. These days, the only thing that comes close to real estate as a national obsession is poker. }}</ref> This bubble is roughly coincident with real estate bubbles in the United Kingdom, Germany and even South Korea.{{Fact|date=July 2008}}
[[Image:Shiller IE2 Fig 2-1.png|300px|right|thumb|[[Robert Shiller]]'s plot of U.S. home prices, population, building costs, and bond yields, from ''[[Irrational Exuberance (book)|Irrational Exuberance]]'', 2d ed.<ref name="IE2"/> Shiller shows that inflation-adjusted U.S. home prices increased 0.4% per year from 1890–2004, and 0.7% per year from 1940–2004, whereas U.S. census data from 1940–2004 shows that the self-assessed value increased 2% per year.]]
Bubbles may be definitively identified only in hindsight, after a market correction,<ref name="Economist: After the Fall">A prediction of a correction in the housing market, possibly after the "[[autumn|fall]]" of 2005, is implied by ''[[The Economist]]'' magazine's cover story for the article "After the fall", which illustrates a brick falling, with the label "House Prices": [[:Image:Economist-06-15-2005.jpg]]. {{cite news |title=After the fall |work=[[The Economist]] |date=2005-06-16 |url=http://www.economist.com/printedition/displaystory.cfm?Story_ID=4079458 }}</ref> which began for the U.S. housing market in 2005–2006.<ref name="Barron's crisis"/><ref name="Fortune deadzone"/><ref name="BG ARM">{{cite news |title=Adjustable-rate loans come home to roost: Some squeezed as interest rises, home values sag |work=[The Boston Globe]] |date=2006-01-11 |url=http://www.boston.com/realestate/news/articles/2006/01/11/adjustable_rate_loans_come_home_to_roost?mode=PF }}</ref><ref name="BH Mass foreclosures"/><ref name="PHX homes vacant"/><ref name="Lereah hard landing"/><ref name="wp_trejos">{{cite news |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/04/24/AR2007042400627.html |title=Existing-Home Sales Fall Steeply |author=Nancy Trejos |work=[[The Washington Post]] |date=2007-04-24 |accessdate=2008-03-17 }}</ref> Former U.S. [[Federal Reserve Board]] Chairman [[Alan Greenspan]] said "we had a [[economic bubble|bubble]] in housing"<ref name="Greenspan admits bubble NewsHour">{{cite news
|title=Alan Greenspan Interview with Jim Lehrer |date=2007-09-18 |work=[[The NewsHour with Jim Lehrer]] |url=http://youtube.com/watch?v=yU4WjhijOMY }}</ref><ref name="Greenspan admits bubble FT">{{cite news |title=Greenspan alert on US house prices |date=2007-09-17 |work=[[Financial Times]] |url=http://www.ft.com/cms/s/0/31207860-647f-11dc-90ea-0000779fd2ac.html }}</ref> and also said in the wake of the [[United States housing bubble#Subprime mortgage industry collapse|subprime mortgage and credit crisis]] in 2007, "I really didn't get it until very late in 2005 and 2006."<ref name="Greenspan didn't get it">{{cite news |title=Greenspan says didn't see subprime storm brewing |date=2007-09-14 |work=[[Reuters]] |first=Mark |last=Felsenthal |url=http://www.reuters.com/article/bankingfinancial-SP/idUSL1426151220070914?sp=true }}</ref> The [[United States housing bubble#Subprime mortgage industry collapse|mortgage and credit crisis]] was caused by a large number of home owners unable to pay the mortgage as their
low introductory rate (sub-prime) mortgages reverted to regular interest rates. [[Freddie Mac]] CEO Richard Syron concluded, "We had a bubble",<ref name="subprime shockwaves">{{cite news |title=Subprime shockwaves |work=[[Bloomberg L.P.|Bloomberg]] |date=2007-07-19 |url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amTFyi_htQvI }}</ref> and concurred with [[Yale University|Yale]] economist [[Robert Shiller]]'s warning that home prices appear overvalued and that the correction could last years with trillions of dollars of home value being lost.<ref name="subprime shockwaves"/> Greenspan warned of "large double digit declines" in home values "larger than most people expect."<ref name="Greenspan admits bubble FT"/> Problems for home owners with good credit surfaced in mid-2007, causing the U.S.'s largest mortgage lender [[Countrywide Financial]] to warn that a recovery in the housing sector is not expected to occur at least until 2009 because home prices are falling "almost like never before, with the
exception of the [[Great Depression]]."<ref name="CFC warning">{{cite news |title=Lender Sees Mortgage Woes for 'Good' Risks |work=[[The New York Times]] |date=2007-07-25 |url=http://www.nytimes.com/2007/07/25/business/25lend.html }}</ref> The impact of booming home valuations on the [[Economy of the United States|U.S. economy]] since the 2001–2002 [[recession]] was an important factor in the recovery because a large component of consumer spending came from the related refinancing boom, which simultaneously allowed people to reduce their monthly mortgage payments with lower interest rates and withdraw equity from their homes as values increased.<ref name="WeekStd bubble trouble">{{cite news |first=Andrew |last=Laperriere |title=Housing Bubble Trouble: Have we been living beyond our means? |work=[[The Weekly Standard]] |date=2006-04-10 |url=http://www.weeklystandard.com/Content/Public/Articles/000/000/012/053ajgwr.asp }}</ref> Any collapse of the U.S. Housing Bubble has a direct impact not only on
home valuations, but the nation's mortgage markets, home builders, [[real estate]], home supply retail outlets, [[Wall Street]] [[hedge funds]] held by large institutional investors, and [[foreign bank]]s, increasing the risk of a nationwide recession.<ref name="CFC warning"/><ref name="WeekStd bubble trouble"/><ref name="Roubini free fall"/><ref name="RGE tramp stamp"/> Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President [[George W. Bush]] and [[Chairman of the Federal Reserve]] [[Ben Bernanke]] to announce a limited bailout of the U.S. housing market for homeowners unable to pay their mortgage debts.<ref name="bailout">{{cite news |title=Bush Moves to Aid Homeowners |work=[[The Wall Street Journal]] |date=2007-08-31 |url=http://online.wsj.com/article/SB118851742988914064.html?mod=googlenews_wsj }}</ref>
==Timeline==
See [[Timeline of the United States housing bubble]]
==Identifying the housing bubble==
[[Image:Economist-06-15-2005.jpg|frame|left|thumb|''[[The Economist]]'' magazine cover, June 16, 2005, with a prediction about the direction of home prices after the "fall" of 2005.<ref name="Economist: After the Fall"/>]]
Any type of [[economic bubble]] is difficult to identify except in [[hindsight]], after the [[Stock market crash|crash]], although many economic and cultural factors have led several economists to argue that a housing bubble exists in the U.S.<ref name="Economist: After the Fall"/><ref name="IE2">{{cite book |last=Shiller |first=Robert |title=[[Irrational Exuberance (book)|Irrational Exuberance]] |edition=2d ed. |year=2005 |publisher=[[Princeton University Press]] |isbn=0-691-12335-7 }}</ref><ref name="Harpers serfdom">{{cite news |last=Hudson |first=Michael |title=The New Road to Serfdom| work=[[Harper's Magazine|Harper's]] |date=May 2006 |volume=312 | number=1872 |pages=39–46 }}</ref><ref name="Leamer soft landing fantasy">{{cite news |last=Leamer |first=Ed | title=Is economy headed to a soft landing? |date=2006-08-23 |work=[[USA Today]] |url=http://www.usatoday.com/money/economy/2006-08-23-recession-usat_x.htm |quote=This soft-landing scenario is a fantasy... Anything housing-related is going to
feel like a recession, almost like a depression. }}</ref><ref name="Hamilton downturn">{{cite news |last=Hamilton |first=Jim |title=New home sales continue to fall |date=2006-08-25 |work=Econbrowser |url=http://www.econbrowser.com/archives/2006/08/new_home_sales.html |quote=No question about it, the housing downturn is here now, and it's big. }}</ref><ref name="Shiller Bloomberg">{{cite news |last=Shiller |first=Robert |title=Bloomberg Interview of Robert Shiller |date=2006-08-20 |work=[[Bloomberg L.P.|Bloomberg]] |url=http://www.bloomberg.com/avp/avp.htm?T=default&clipSRC=mms://media2.bloomberg.com/cache/vOPaj0gMGHxg.asf }}</ref><ref name="Roubini spin">{{cite news |last=Roubini |first=Nouriel |title=Eight Market Spins About Housing by Perma-Bull Spin-Doctors... And the Reality of the Coming Ugliest Housing Bust Ever... |date=2006-08-26 |work=RGE Monitor |url=http://www.rgemonitor.com/blog/roubini/143257 |quote=A lot of spin is being furiously spinned around–often from folks close to real estate
interests–to minimize the importance of this housing bust, it is worth to point out a number of flawed arguments and misperception that are being peddled around. You will hear many of these arguments over and over again in the financial pages of the media, in sell-side research reports and in innumerous TV programs. So, be prepared to understand this misinformation, myths and spins. }}</ref><ref name="Risky Lending Trends">{{cite news |last=Smalkin |first=Frederic N.C. |title=Risky Lending Trends could Bust Mortgage Boom |work=[[The Baltimore Sun]] |date=2005-05-09 |url=http://pqasb.pqarchiver.com/baltsun/access/834937141.html?dids=834937141:834937141&FMT=ABS&FMTS=ABS:FT}}</ref> The ''[[The Economist|Economist]]'' magazine said that "the worldwide rise in house prices is the biggest bubble in history,"<ref>{{cite news |title=In come the waves: The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops. | work=[[The Economist]] | date=2005-06-16 |
url=http://www.economist.com/opinion/displaystory.cfm?story_id=4079027 | quote=The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops. }}</ref> so any explanation must consider global causes as well as those specific to the [[United States]]. Former Federal Reserve Board Chairman Alan Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the U.S. housing market) ... it's hard not to see that there are a lot of local bubbles"; Greenspan admitted in 2007 that ''froth'' "was a euphemism for a bubble."<ref name="Greenspan admits bubble FT"/> President Bush said of the U.S. housing boom in early 2006: "If houses get too expensive, people will stop buying them... Economies should cycle."<ref>{{cite press release |title=President Highlights Importance of Small Business in Economic Growth |publisher=[[The White House]] |date=2006-01-19 |url=http://www.whitehouse.gov/news/releases/2006/01/20060119-2.html |quote=[President Bush was asked
about the housing boom's impact on the ability of the questioner's children to purchase a home. The President answered:] '...If houses get too expensive, people will stop buying them, which will cause people to adjust their spending habits... Let the market function properly. I guarantee that your kind of question has been asked throughout the history of homebuilding - you know, prices for my homes are getting bid up so high that I'm afraid I'm not going to have any consumers - or my kid - and yet, things cycle. That's just the way it works. Economies should cycle.' }}</ref>
Based on markedly declining 2006 market data, including lower sales, rising inventories, falling [[median]] prices, and increased foreclosure rates,<ref name="BH Mass foreclosures">{{cite news |title=Mass. home foreclosures rise quickly |work=[[The Boston Herald]] |date=2006-08-29 |url=http://business.bostonherald.com/realestateNews/view.bg?articleid=154892&format=text }}</ref> some economists have concluded that the correction in the U.S. housing market began in 2006.<ref name="Roubini free fall">{{cite news |last=Roubini |first=Nouriel |title=Recession will be nasty and deep, economist says |date=2006-08-23 |work=[[MarketWatch]] |url=http://www.marketwatch.com/news/story/story.aspx?guid=%7BE18E95AF-DBFF-4EE4-ACF7-530A3CD714D3%7D |quote=This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices. }}</ref><ref>{{cite news |title=The Slow Motion Train Wreck |last=Baker |first=Dean |work=[[The American Prospect]] |date=2006-08-02
|url=http://www.prospect.org/deanbaker/2006/08/the_slow_motion_train_wreck.html }}</ref> A May 2006 ''[[Fortune (magazine)|Fortune]]'' magazine report on the US housing bubble states: "The great housing bubble has finally started to deflate ... In many once-sizzling markets around the country, accounts of dropping list prices have replaced tales of waiting lists for unbuilt condos and bidding wars over humdrum three-bedroom colonials."<ref name="Fortune deadzone">{{cite news |title=Welcome to the Dead Zone | work=[[Fortune (magazine)|Fortune]] | date=2006-05-05 |url=http://money.cnn.com/2006/05/03/news/economy/realestateguide_fortune/ |accessdate=2008-03-17 }}
This article classified several U.S. real-estate regions as "Dead Zones", "Danger Zones", and "Safe Havens."
{| class="wikitable" style="text-align:left"
|+ ''[[Fortune magazine|Fortune]]'' magazine Housing Bubble "Dead Zones"
|-
! "Dead Zones" !! "Danger Zones" !! "Safe Havens"
|-
|style="width:33%;background:#767853;"| Boston
|style="width:33%;background:#ff7f7f;"| Chicago
|style="width:33%;background:#7f7fff;"| Cleveland
|-
|style="background:#767853;"| Las Vegas
|style="background:#ff7f7f;"| Los Angeles
|style="background:#7f7fff;"| Columbus
|-
|style="background:#767853;"| Miami
|style="background:#ff7f7f;"| New York
|style="background:#7f7fff;"| Dallas
|-
|style="background:#767853;"| Washington D.C. / Northern Virginia
|style="background:#ff7f7f;"| San Francisco / Oakland
|style="background:#7f7fff;"| Houston
|-
|style="background:#767853;"| Phoenix
|style="background:#ff7f7f;"| Seattle
|style="background:#7f7fff;"| Kansas City
|-
|style="background:#767853;"| Sacramento
|style="background:#ff7f7f;"|
|style="background:#7f7fff;"| Omaha
|-
|style="background:#767853;"| San Diego
|style="background:#ff7f7f;"|
|style="background:#7f7fff;"| Pittsburgh
|} background:#7f7fff;"| Pittsburgh
</ref> The chief economist of [[Freddie Mac]] and the director of [[Harvard University]]'s [http://www.jchs.harvard.edu/ Joint Center for Housing Studies] (JCHS) deny the existence of a national housing bubble and express doubt that any significant decline in home prices are possible, citing consistently rising prices since the [[Great Depression]], expected increasing demand by the [[Baby Boom]] generation, and healthy employment.<ref name="BW bubble or bunk">{{cite news |title=Housing Bubble—or Bunk? Are home prices soaring unsustainably and due for plunge? A group of experts takes a look—and come to very different conclusions |work=[Business Week]] |date=2005-06-22 |url=http://www.businessweek.com/bwdaily/dnflash/jun2005/nf20050622_9404_db008.htm}}</ref><ref name="Harvard JCHS 2006">{{cite news |title=The State of the Nation's Housing 2006 |date=2006 |publisher=[[Harvard University]], Joint Center for Housing Studies |url=http://www.jchs.harvard.edu/publications/markets/son2006/son2006.pdf
}}</ref><ref>{{cite news |last=Retsinas |first=Nicolas | title=The housing wail |date=2006-09-26 |work=[[Scripps Howard News Service]] |url=http://www.redding.com/redd/nw_business/article/0,2232,REDD_17527_5024778,00.html |quote=The headline hints of catastrophe: a dot-com repeat, a bubble bursting, an economic apocalypse. Cassandra, though, can stop wailing: the expected price corrections mark a slowing in the rate of increase—not a precipitous decline. This will not spark a chain reaction that will devastate homeowners, builders and communities. Contradicting another gloomy seer, Chicken Little, the sky is not falling. }}</ref> However, some have suggested that the funding that the JCHS receives from the real estate industry may have affected their judgment.<ref name="Fool Harvard JCHS">{{cite news |title=Harvard Hypes Housing, but Why? |date=2006-09-29 |work=[[Motley Fool]] |url=http://aol.fool.com/news/commentary/2006/commentary06092914.htm }}</ref> [[David Lereah]], former chief economist of the
[[National Association of Realtors]] (NAR), distributed "Anti-Bubble Reports" in August 2005 to "respond to the irresponsible bubble accusations made by your local media and local academics."<ref>{{cite news |last=Lereah | first=David | title=Anti-Bubble Reports |publisher=[[National Association of Realtors]] |date=August 2005 |url=http://www.realtor.org/research.nsf/pages/anti-bubblereports |archiveurl=http://web.archive.org/web/20051126044138/http://www.realtor.org/research.nsf/pages/anti-bubblereports |archivedate=2005-11-12 }}</ref> Among other statements, the reports say that people "should [not] be concerned that home prices are rising faster than family income", that "there is virtually no risk of a national housing price bubble based on the fundamental demand for housing and predictable economic factors", and that "a general slowing in the rate of price growth can be expected, but in many areas inventory shortages will persist and home prices are likely to continue to rise above historic
norms."<ref>{{cite news |title=Housing Bubble Prospects Q&A |publisher=[[National Association of Realtors]] |date=2005 |url=http://www.realtor.org/Research.nsf/Pages/Anti-BubbleQ&A?OpenDocument }}</ref> Following reports of rapid sales declines and price depreciation in August 2006,<ref name="Tully Fortune myths">{{cite news |last=Tully |first=Shawn |title=Getting real about the real estate bubble |date=2005-08-25 |work=[[Fortune (magazine)|Fortune]] |url=http://money.cnn.com/2006/08/24/real_estate/pluggedin_tully.fortune/index.htm }}</ref><ref name="CT Lereah Watch">{{cite news |title=Housing market may be on ice, but the blame market is red hot |date=2006-09-10 |work=[[Chicago Tribune]] |url=http://www.chicagotribune.com/business/chi-0609100082sep10,1,5965765.story?coll=chi-business-hed&ctrack=1&cset=true }}</ref> Lereah admitted that "he expects home prices to come down 5% nationally, more in some markets, less in others. And a few cities in Florida and California, where home prices soared to nose-bleed
heights, could have 'hard landings'."<ref name="Lereah hard landing">{{cite news |last=Lereah |first=David |title=Existing home sales drop 4.1% in July, median prices drop in most regions |date=2005-08-24 |work=[[USA Today]] |url=http://www.usatoday.com/money/economy/housing/2006-08-23-july-sales_x.htm }}</ref>
National home sales and prices both fell dramatically in March 2007 — the steepest plunge since the Savings and Loan crisis in 1989 — according to [[National Association of Realtors|NAR]] data, with sales down 13% to 482,000 from the peak of 554,000 in March 2006 and the national median price falling nearly 6% to $217,000 from the peak of $230,200 in July 2006.<ref name="wp_trejos"/>
[[John A. Kilpatrick]], of [[Greenfield Advisors]], was cited by [[Bloomberg News]] on June 14, 2007, on the linkage between increased foreclosures and localized housing price declines. "Living in an area with multiple foreclosures can result in a 10 percent to 20 percent decrease in property values." He went on to say, "In some cases that can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth. The innocent houses that just happen to be sitting next to those properties are going to take a hit."<ref>{{cite news |work=[[Bloomberg News]] |title=U.S. Mortgages Enter Foreclosure at Record Pace |first=Kathleen |last=Howley |date=2007-06-14 |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=aLwz4ThaWzAg&refer=home }}</ref> He echoed his own comments from the April 5, 2007, issue of the ''[[International Herald Tribune]]'', in which he said, "Living on a block with multiple foreclosures can result in a 10 percent to 20 percent decrease in property values.
In some cases that can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth. If you see a neighborhood with a couple of foreclosures on the block, a couple of auction signs in the yards, that's going to be a neighborhood that's stigmatized. The innocent houses that just happen to be sitting next to those properties are going to take a hit."<ref>{{cite news |work=[[International Herald Tribune]] |title=Rising Foreclosures Flood Detroit Market |date=2007-04-05 |url=http://www.iht.com/articles/2007/04/04/bloomberg/bxdetroit.php }}</ref>
The [[US Senate]] [[United States Senate Committee on Banking, Housing, and Urban Affairs|Banking Committee]] held hearings on the housing bubble and related loan practices in 2006, titled "The Housing Bubble and its Implications for the Economy" and "Calculated Risk: Assessing Non-Traditional Mortgage Products".<ref name="Senate hearings">{{cite news |title=Lawmakers to probe housing 'bubble', mortgages |date=2006-09-12 |work=[[Reuters]] |url=http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-09-12T191303Z_01_N12323829_RTRIDST_0_BUSINESSPRO-ECONOMY-HOUSING-SENATE-DC.XML&from=business }} Streaming video is available at the "Paper-Money" blog for both the hearings of "[http://paper-money.blogspot.com/2006/09/congressional-bubble-trouble-take-1.html The Housing Bubble and its Implications for the Economy]" and "[http://paper-money.blogspot.com/2006/09/congressional-bubble-trouble-take-2.html Calculated Risk: Assessing Non-Traditional Mortgage Products]."</ref> Following the [[Subprime mortgage crisis|collapse]] of the [[subprime lending|subprime]] mortgage industry in March 2007, Senator [[Chris Dodd]], Chairman of the [[United States Senate Committee on Banking, Housing, and Urban Affairs|Banking Committee]] held hearings and asked executives from the top five subprime mortgage companies to testify and explain their lending practices. Dodd said that "predatory lending practices" endangered the home ownership for millions of people.<ref name="Reuters Dodd">{{cite news |title=Top five US subprime lenders asked to testify-Dodd |first=John |last=Poirier |work=[[Reuters]] |url=http://www.reuters.com/article/bankingfinancial-SP/idUSN1930923820070320 |date=2007-03-19 |accessdate=2008-03-17 }}</ref> Moreover, Democratic senators such as Senator [[Charles Schumer]] of New York are already proposing a federal government bailout of subprime borrowers in order to save homeowners from losing their residences.<ref name="Reuters Dodd"/>
==Causes==
{{Main|Causes of the United States housing bubble}}
==National bubble or local bubbles?==
[[Image:USA home appreciation 1998 2006.svg|300px|right|thumb|Inflation-adjusted housing prices in the United States by state, 1998–2006.]]
Home price appreciation has been non-uniform to such an extent that some economists, including former Fed Chairman Alan Greenspan, have argued that United States did not have a nationwide housing bubble per se, but rather a number of local bubbles.<ref>{{cite news |url=http://www.usatoday.com/money/industries/energy/2005-05-20-greenspan_x.htm |title=Greenspan: 'Local bubbles' build in housing sector |date=2005-05-20 |work=[[USA Today]] }}</ref> However, in 2007 Greenspan admitted that there was a bubble in the US housing market, and that "all the froth bubbles add up to an aggregate bubble."<ref name="Greenspan admits bubble FT"/> Despite greatly relaxed lending standards and low interest rates, many regions of the country have seen very little growth during the "bubble period". Out of 20 largest metropolitan areas tracked by [[Robert Shiller|S&P/Case-Shiller]] [[house price index]], six (Dallas, Cleveland, Detroit, Denver, Atlanta, and Charlotte) have seen less than 10% price growth in inflation-adjusted
terms in 2001–2006.<ref>{{cite web |url=http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,3,1,0,0,0,0,0.html |title=S&P/Case-Shiller Home Price Indices-historical spreadsheets }}</ref> Seven metropolitan areas (Tampa, Miami, San Diego, Los Angeles, Las Vegas, Phoenix, and Washington DC) have appreciated more than 80% in the same period of time.
Furthermore, housing bubble did not manifest itself in each one of these seven areas at the same time. San Diego and Los Angeles maintained consistently high appreciation rates since late 1990s. Las Vegas and Phoenix didn't develop a bubble until 2003 and 2004, respectively.
Somewhat paradoxically, as the housing bubble deflates,<ref name="top10forecl">{{cite web |url=http://money.cnn.com/2007/08/14/real_estate/California_cities_lead_foreclosure/index.htm |work=[[CNNMoney.com]] |date=2007-08-14 |title=California cities fill top 10 foreclosure list }}</ref> some metropolitan areas (such as Denver and Atlanta) are experiencing high [[foreclosure]] rates, even though they didn't record much house appreciation in the first place, and, therefore, did not appear to be part of the national bubble. This was also true of some cities in the [[Rust Belt]] such as [[Detroit]]<ref>{{cite news |title=Home prices tumble as consumer confidence sinks |work=[[Reuters]] |date=2007-11-27 |accessdate=2008-03-17 |url=http://www.reuters.com/article/bondsNews/idUSN2748402720071127?sp=true }}</ref> and [[Cleveland]]<ref>{{cite news |title=Cleveland: Foreclosures weigh on market|date=2006-11-21 |work=[[USA Today]] |first=Noelle |last=Knox
|url=http://www.usatoday.com/money/economy/housing/2006-11-21-close-cleveland_x.htm }}</ref> where weak local economies caused little appreciation early in the decade, but had declining values and increased foreclosures in 2007. California, Michigan, Ohio and Florida are currently states with the highest foreclosure rates.
==Side effects==
Unprecedented runup in house prices between 1997 and 2005 had a number of wide ranging effects on the economy of the United States.
* One of the most direct effects was on construction of new houses. In 2005, 1,283,000 new single-family houses were sold, compared with an average of 609,000 per year during 1990–1995.<ref>{{cite web |url=http://www.census.gov/const/C25Ann/soldstories.pdf |title=Number of Stories in New One-Family Houses Sold }}</ref> Largest home builders, such as [[D. R. Horton]], [[Pulte]], and [[Lennar]], saw their largest share prices and revenues in 2004–2005. D. R. Horton's stock went from $3 in early 1997 to all-time high of $42.82 on July 20, 2005. Pulte Corp's revenues grew from $2.33 billion in 1996 to $14.69 billion in 2005.<ref>{{cite web |url=http://finance.yahoo.com/q/hp?s=DHI |title=DR Horton Inc. historical share prices }}</ref><ref>{{cite web |url=http://216.139.227.101/interactive/phm2006/ |title=Pulte Corp. 2006 Annual Report }}</ref><ref>{{cite web |url=http://www.sec.gov/Archives/edgar/data/822416/0000950009-97-000127.txt |title=Pulte Corp. 1996 Form 10-K - Annual report }}</ref>
* [[Mortgage equity withdrawal]]s - primarily home equity loans and cash-out refinancings - grew considerably since early 1990s. According to estimates by US Federal Reserve, in 2005, homeowners extracted $750 billion from equity of their homes (up from $106 billion in 1996), spending two thirds of it on personal consumption, home improvements, and credit card debt.<ref>{{cite web |url=http://www.federalreserve.gov/pubs/feds/2007/200720/200720pap.pdf |title=Sources and Uses of Equity Extracted from Homes }}</ref>
* It is widely believed that increased economic activity caused by expanding housing bubble in 2001–2003 was partly responsible for prevention of full-scale [[recession]] in U.S. economy following the dot-com bust.<ref>{{cite web |url=http://www.mises.org/story/1670 |title=America's Unsustainable Boom }}</ref>
* Rapidly growing house prices and increasing price gradients forced many residents to flee expensive centers of many metropolitan areas, resulting in explosive growth of [[exurbs]] in some regions. Population of [[Riverside County, California]] almost doubled from 1,170,413 in 1990 to 2,026,803 in 2006, due to its relative proximity to [[San Diego]] and [[Los Angeles]]. On the East Coast, [[Loudoun County, Virginia]], near [[Washington, DC]], saw its population triple between 1990 and 2006.{{Fact|date=September 2007|date=September 2007}}
Real estate market correction of 2006–2007 resulted in reversal of these trends.{{Fact|date=September 2007|date=September 2007}} As of August 2007, D.R.Horton's and Pulte Corp's shares were down to 1/3 of their respective peaks, as new residential home sales fall. Some cities and regions that experienced fastest growth during 2000–2005 began to show high [[foreclosure]] rates.<ref name="top10forecl"/> Weakness in housing industry and loss of mortgage equity withdrawal driven consumption could lead to a recession, but as of mid-2007 this recession was not ascertained.<ref>{{cite press release |date=2007-07-27 |accessdate=2008-03-24 |format=PDF |url=http://www.bea.gov/newsreleases/national/gdp/2007/pdf/gdp207a.pdf |title=Bureau of Economic Analysis GDP estimate, Q2 2007 }}</ref> In March 2008, [[Thomson Financial]] reported that the "Chicago Federal Reserve Bank's National Activity Index for February sent a signal that a recession [had] probably begun..."<ref>{{cite news
|url=http://www.forbes.com/markets/feeds/afx/2008/03/24/afx4806227.html |publisher=[[Thomson Financial]] |title=Chicago Fed index indicates recession has probably begun |work=[[Forbes]] |accessdate=2008-03-24 |date=2008-03-24 }}</ref>
Share prices of [[Fannie Mae]] and [[Freddie Mac]] [http://www.nytimes.com/2008/07/12/business/12markets.html?hp plummets] in 2008 as investors worry that they do not have sufficient capital to cover losses on their $5 trillion portfolio of loans and guarantees on loans.
==Housing market correction==
{{main|United States housing market correction}}
{| align="right"
|-
| [[Image:WaPo Bubble Bench.png|thumb|300px|right|The Washington DC "bubble bench" made famous by the ''[[The Washington Post]]'';<ref name="WP bubble bench">{{cite news |title=Doors Close for Real Estate Speculators |date=2006-04-22 |work=[[The Washington Post]] |url=http://www.washingtonpost.com/wp-dyn/content/article/2006/04/21/AR2006042101720.html }}</ref> the 49 lockboxes hold keys to unsold units of a 200 unit condominium complex in [[Fairfax County]], [[Virginia]].]]
|-
| [[Image:Cshpi-peak.svg|thumb|300px|right|Comparison of the percentage change of the [[House price index|Case-Shiller Home Price Index]] for the housing correction beginning in 2005 (red) and the 1980s–1990s correction (blue), comparing monthly [[House price index|CSI]] values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.]]
|-
|
{| style="width:300px; background-color:ghostwhite; border:1px solid black; padding-left:1.5em; padding-right:1.5em; padding-top:0.75em; padding-bottom:0.75em; margin-top:0.75em; margin-bottom:0.75em; margin-left:1.5em; margin-right:0em"
|
[[National Association of Realtors|NAR]] chief economist David Lereah's Explanation of "What Happened" from the 2006 NAR Leadership Conference<ref>{{cite news |last=Lereah |first=David |title=Real Estate Reality Check (Powerpoint talk) |publisher=[[National Association of Realtors]] Leadership Summit |date=2006-08-17 |url=http://www.realtor.org/Research.nsf/files/Leadership%20Summit%20%28August%202006%29.ppt/$FILE/Leadership%20Summit%20%28August%202006%29.ppt |format=Powerpoint }}
{| align="center"
|-
| [[Image:Condo – Significant Price Depreciation in West and South.png|thumb|300px|right|Condominium Price Appreciation (percentages) in the south and west United States, 2002–2006. (Source: [[National Association of Realtors|NAR]].)]]
|}</ref>
*Boom ended August 2005
*Mortgage rates rose almost one point
*Affordability conditions deteriorated
*Speculative investors pulled out
*Homebuyer confidence plunged
*Resort buyers went to sidelines
*Trade-up buyers to sidelines
*First-time buyers priced out of market
|}
|}
Based on the historic trends in valuations of U.S. housing,<ref name="IE2"/><ref>{{cite news |last=Baker |first=Dean |title=The bubble question |work=[[CNNMoney.com]] |date=2004-07-27 |url=http://money.cnn.com/2004/07/13/real_estate/buying_selling/risingrates/ |quote=There has never been a run up in home prices like this. }}</ref> many economists and business writers have predicted a market correction, ranging from a few percentage points, to 50% or more from peak values in some markets,<ref>{{cite news |title=US heading for house price crash, Greenspan tells buyers |work=[[The Times]] |date=2005-08-27 |url=http://business.timesonline.co.uk/tol/business/economics/article559641.ece |quote=Alan Greenspan, the United States's central banker, warned American homebuyers that they risk a crash if they continue to drive property prices higher... On traditional tests, about a third of U.S. local homes markets are now markedly overpriced. }}</ref><ref>{{cite news |title=Buffett: Real estate slowdown ahead
|work=[[CNNMoney.com]] |date=2006-05-08 |url=http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/index.htm |quote=Once a price history develops, and people hear that their neighbor made a lot of money on something, that impulse takes over, and we're seeing that in commodities and housing... Orgies tend to be wildest toward the end. It's like being Cinderella at the ball. You know that at midnight everything's going to turn back to pumpkins & mice. But you look around and say, 'one more dance,' and so does everyone else. The party does get to be more fun—and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice. }}</ref><ref>{{cite news |title=Surviving a Real-Estate Slowdown |work=[[The Wall Street Journal]] |date=2006-07-05 |url=http://online.wsj.com/public/article_print/SB115204791463597636-_dwtqavFBN5w_kTARC8T9SKB_Fs_20060711.html |quote=A significant decline in prices is coming. A huge buildup of inventories is
taking place, and then we're going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks. }}</ref><ref name="Barron's crisis">{{cite news |title=The No-Money-Down Disaster |date=2006-08-21 |work=[[Barron's Magazine|Barron's]] |url=http://online.barrons.com/article/SB115594208047539900.html }}</ref><ref name="NW bubble bloggers">{{cite news |title=Bubble Blog |date=2006-08-08 |work=[[Newsweek]] |url=http://www.msnbc.msn.com/id/14252223/site/newsweek/ }}</ref> and, in spite of the fact that this cooling has not affected all areas of the U.S., some have warned that it could and that the correction would be "nasty" and "severe".<ref>{{cite news |last=Krugman |first=Paul |title=No bubble trouble? |work=[[The New York Times]] |date=2006-01-02 |url=http://select.nytimes.com/2006/01/02/opinion/02krugman.html |quote=[T]he overall market value of housing has lost touch with economic reality. And there's a nasty correction
ahead. }}</ref><ref>{{cite news |title=Housing bubble correction could be severe |work=[[US News & World Report]] |date=2006-06-13 |url=http://www.usnews.com/usnews/biztech/articles/060613/13housing_bubble.htm }}</ref> Chief economist Mark Zandi of the economic research firm [[Moody's]] Economy.com predicted a "crash" of double-digit depreciation in some U.S. cities by 2007–2009.<ref name="Moody crash">{{cite news |title=Study sees '07 'crash' in some housing |date=2006-10-05 | work=[[Chicago Tribune]] |url=http://www.chicagotribune.com/business/chi-0610050109oct05,1,1050563.story?coll=chi-business-hed&ctrack=1&cset=true }}</ref><ref>{{cite news |title=Moody's predicts big drop in Washington housing prices |date=2006-10-02 |work=[[Washington Business Journal]] |url=http://www.bizjournals.com/washington/stories/2006/10/02/daily45.html }}</ref><ref name="Moyers Morgenson"/> In a paper presented at a Federal Reserve Board economic symposium in August 2007, Yale University economist [[Robert Shiller]]
warned, “the examples we have of past cycles indicate that major declines in real home prices—even 50 percent declines in some places—are entirely possible going forward from today or from the not too distant future.”<ref name="Shiller Jackson Hole 2007">{{cite news |publisher=Finfacts Ireland |title=Two top US economists present scary scenarios for US economy; House prices in some areas may fall as much as 50% - Housing contraction threatens a broader recession |date=2007-09-03 |url=http://www.finfacts.com/irelandbusinessnews/publish/article_1011005.shtml |quote=The examples we have of past cycles indicate that major declines in real home prices—even 50 percent declines in some places—are entirely possible going forward from today or from the not too distant future. }}</ref>
===Bubble bursts===
The booming housing market appears to have halted abruptly for many parts of the U.S. in late summer of 2005, and as of summer 2006, several markets are facing the issues of ballooning inventories, falling prices, and sharply reduced sales volumes. In August 2006, ''Barron's'' magazine warned, "a housing crisis approaches", and noted that the median price of new homes has dropped almost 3% since January 2006, that new-home inventories hit a record in April and remain near all-time highs, that existing-home inventories are 39% higher than they were just one year ago, and that sales are down more than 10%, and predicts that "the national median price of housing will probably fall by close to 30% in the next three years ... simple reversion to the mean."<ref name="Barron's crisis"/> ''[[Fortune magazine|Fortune]]'' magazine labelled many previously strong housing markets as "Dead Zones;"<ref name="Fortune deadzone"/> other areas are classified as "Danger Zones" and "Safe Havens." ''[[Fortune
magazine|Fortune]]'' also dispelled "four myths about the future of home prices."<ref name="Tully Fortune myths"/> In [[Boston]], year-over-year prices are dropping,<ref>{{cite news |title=Housing slowdown deepens in Mass. |work=[[Boston Globe]] |date=2006-04-26 |url=http://www.boston.com/business/globe/articles/2006/04/26/housing_slowdown_deepens_in_mass?mode=PF }}</ref> sales are falling, inventory is increasing, foreclosures are up,<ref name="BG ARM"/><ref name="BH Mass foreclosures"/> and the correction in [[Massachusetts]] has been called a "hard landing".<ref>{{cite news |title=Sellers chop asking prices as housing market slows |work=[[Boston Globe]] |date=2005-12-09 |url=http://www.boston.com/business/articles/2005/12/09/sellers_chop_asking_prices_as_housing_market_slows?mode=PF }}</ref>
The previously booming<ref name="Barron's BNH1"/> housing markets in [[Washington, D.C.]], [[San Diego, California|San Diego]], [[Phoenix, Arizona|Phoenix]], and other cities have stalled as well.<ref>{{cite news |title=Bubble, Bubble-Then Trouble |work=[[Business Week]] |date=2005-12-19 December |url=http://www.businessweek.com/magazine/content/05_51/b3964052.htm }}</ref><ref>{{cite news |title=San Diego Home Prices Drop |publisher=[[NBC]] |date=2006-07-13 |url=http://www.nbcsandiego.com/news/9512588/detail.html }}</ref> Searching the Arizona Regional [[Multiple Listing Service]] (ARMLS) shows that in summer 2006, the for-sale housing inventory in Phoenix has grown to over 50,000 homes, of which nearly half are vacant (see graphic).<ref name="PHX homes vacant">{{cite news |title=Over 14,000 Phoenix For-Sale Homes Vacant |date=2006-03-10 |url=http://thehousingbubbleblog.com/?p=256 |publisher=The Housing Bubble Blog }}
{| align="center"
|-
| [[Image:PHX inventory July2005-March2006.png|thumb|200px|right|Inventory of [http://www.arizonalisting.info houses for sale in Phoenix, AZ] from July 2005 through March 2006. As of March 10, 2006, well over 14,000 (nearly half) of these for-sale homes are vacant. (Source: Arizona Regional Multiple Listing Service.)]]
|}</ref> Several home builders have revised their forecasts sharply downward during summer 2006, e.g., [[D.R. Horton|D.R. Horton]] cut its yearly earnings forecast by one-third in July 2006,<ref>{{cite news |title=D.R. Horton warning weighs on builders |work=[[MarketWatch]] |date=2006-07-14 |url=http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB9264E12%2DEB3C%2D4572%2DB46A%2DDAECCED62EC2%7D&siteid=myyahoo&dist=myyahoo }}</ref> the value of luxury home builder [[Toll Brothers]]' stock fell 50% between August 2005 and August 2006,<ref>{{cite news |title=Toll Brothers, Inc. (NYSE:TOL) |work=[[MarketWatch]] |date=006-08-22 |url=http://www.marketwatch.com/tools/quotes/intchart.asp?symb=TOL&siteId=yhoo }}</ref> and the [[Dow Jones]] U.S. Home Construction Index was down over 40% as of mid-August 2006.<ref>{{cite news |title=U.S. Home Construction Index (DJ_3728) |work=[[MarketWatch]] |accessdate=2006-08-18
|url=http://www.marketwatch.com/tools/quotes/intchart.asp?symb=DJ_3728&sid=171546&freq=1&time=8&siteid=myyahoo }}</ref> CEO Robert Toll of [[Toll Brothers]] explained, "builders that built speculative homes are trying to move them by offering large incentives and discounts; and some anxious buyers are canceling contracts for homes already being built."<ref>{{cite news |title=Toll Brothers lowers outlook |work=[[MarketWatch]] |date=2006-08-22 |url=http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B7DA32685%2DEC81%2D4C3B%2D80F0%2D95C91D3AFD51%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo }}</ref> Homebuilder Kara Homes, known for their construction of "[[mcmansion|McMansions]]", announced on September 13, 2006 the "two most profitable quarters in the history of our company", yet filed for bankruptcy protection less than one month later on 6 October.<ref>{{cite news |title=Bankruptcy Considered |work=[[Asbury Park Press]] |date=2006-10-06
|url=http://www.app.com/apps/pbcs.dll/article?AID=/20061006/NEWS/610060412 }}</ref> Six months later on April 10, 2007, Kara Homes sold unfinished developments, causing prospective buyers from the previous year to lose deposits, some of whom put down more than $100,000.<ref>{{cite news |title=Kara Homes buyers may lose deposits |work=[[Asbury Park Press]] |date=2007-04-10 |url=http://www.app.com/apps/pbcs.dll/article?AID=/20070410/NEWS/704100305 }}</ref>
As the housing market began to soften in winter 2005 through summer 2006,<ref>{{cite news |last=Fleckenstein |first=Bill |title=The housing bubble has popped |work=[[MSNBC]] |date=2006-04-24 |url=http://moneycentral.msn.com/content/P149596.asp |quote=Reports of falling sales and investors stuck with properties they can't sell are just the beginning. Property owners should worry; so should their lenders. }}</ref><ref>{{cite news |title=Sales Slow for Homes New and Old |work=[[The New York Times]] |date=2006-07-26 |url=http://www.nytimes.com/2006/07/26/business/26home.html |quote=A variety of experts now say, the housing industry appears to be moving from a boom to something that is starting to look a lot like a bust}}</ref> [[National Association of Realtors|NAR]] chief economist David Lereah predicted a "soft landing" for the market.<ref>{{cite news |last=Lereah |first=David |title=Realtors' Lereah: Housing To Make 'Soft Landing' |work=[[Forbes]] |date=2006-01-01
|url=http://www.forbes.com/facesinthenews/2006/01/25/existing-home-sales-cx_gl_0125autofacescan08.html }}</ref> However, based on unprecedented rises in inventory and a sharply slowing market throughout 2006, Leslie Appleton-Young, the chief economist of the California Association of Realtors, said that she is not comfortable with the mild term "soft landing" to describe what is actually happening in California's real estate market.<ref>{{cite news |last=Appleton-Young |first=Leslie |title=Housing Expert: 'Soft Landing' Off Mark |work=[[Los Angeles Times]] |date=2006-07-21 |url=http://www.latimes.com/business/la-fi-soft21jul21,0,3311200.story?coll=la-home-headlines }}</ref> The ''[[Financial Times]]'' warned of the impact on the [[Economy of the United States|U.S. economy]] of the "hard edge" in the "soft landing" scenario, saying "A slowdown in these red-hot markets is inevitable. It may be gentle, but it is impossible to rule out a collapse of sentiment and of prices... If housing wealth stops rising...
the effect on the world's economy could be depressing indeed."<ref>{{cite news |title=Hard edge of a soft landing for housing |date=2006-08-19 |work=[[Financial Times]] |url=http://www.ft.com/cms/s/97a6e948-2f1f-11db-a973-0000779e2340.html }}</ref>
"It would be difficult to characterize the position of home builders as other than in a hard landing", said Robert Toll, CEO of [[Toll Brothers]].<ref>{{cite news |last=Toll |first=Robert |title=Housing Slump Proves Painful For Some Owners and Builders |date=2006-08-23 |work=[[The Wall Street Journal]] |url=http://online.wsj.com/article_email/SB115630090176442994-lMyQjAxMDE2NTI2MzMyMDMwWj.html }}</ref> Angelo Mozilo, CEO of [[Countrywide Financial]], said "I've never seen a soft-landing in 53 years, so we have a ways to go before this levels out. I have to prepare the company for the worst that can happen."<ref>{{cite news |title=Matters to Mind Over the Weekend |date=2006-08-11 |publisher=[[The Street]] |work=RealMoney |first=Cody |last=Willard |accessdate=2008-03-17 |url=http://www.thestreet.com/p/_googlen/rmoney/codywillardblog/10303328.html }}</ref> Following these reports, Lereah admitted that "he expects home prices to come down 5% nationally", and said that some cities in Florida and California could
have "hard landings."<ref name="Lereah hard landing"/> National home sales and prices both fell dramatically again in March 2007 according to [[National Association of Realtors|NAR]] data, with sales down 13% to 482,000 from the peak of 554,000 in March 2006 and the national median price falling nearly 6% to $217,000 from the peak of $230,200 in July 2006 . The plunge in existing-home sales is the steepest since 1989.<ref name="wp_trejos"/> The new home market is also suffering. The biggest year over year drop in median home prices since 1970 occurred in April 2007. Median prices for new homes fell 10.9 percent according to the Commerce Department.<ref>{{cite news |title=Sales of new U.S. homes surged in April |date=2007-05-24 |work=[[MSNBC]] |url=http://www.msnbc.msn.com/id/18842917/ }}</ref>
Based on slumping sales and prices in August 2006, economist [[Nouriel Roubini]] warned that the housing sector is in "free fall" and will derail the rest of the economy, causing a [[recession]] in 2007.<ref name="Roubini free fall"/> [[Joseph Stiglitz]], winner of the [[Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel|Nobel Prize in economics]] in 2001, agreed, saying that the U.S. may enter a [[recession]] as house prices decline.<ref>{{cite news |title=Stiglitz Says U.S. May Have Recession as House Prices Decline |date=2006-09-08 |work=[[Bloomberg L.P.|Bloomberg]] }}</ref> The extent to which the economic slowdown, or possible recession, will last depends in large part on the resiliency of the U.S. consumer spending, which now makes up approximately 70% of the US$13.7 trillion economy. The evaporation of the wealth effect amid the current housing downturn could negatively affect the consumer confidence and provide further headwind for the U.S. economy and that of the rest of the world.
The [[World Bank]] recently lowered the global economic growth rate due to a housing slowdown in the United States, but it does not believe that the U.S. housing malaise will further spread to the rest of the world. The Fed chairman Benjamin Bernanke said in October 2006 that there is currently a "substantial correction" going on in the housing market and that the decline of residential housing construction is one of the "major drags that is causing the economy to slow"; he predicted that the correcting market will decrease U.S. economic growth by about one percent in the second half of 2006 and remain a drag on expansion into 2007.<ref>{{cite news |title=Bernanke Says 'Substantial' Housing Downturn Is Slowing Growth |date=2006-10-04 |work=[[Bloomberg L.P.|Bloomberg]] |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=ah6TAhIScG0M&refer=home }}</ref> The White House Council of Economic Advisers recently lowered their outlook for U.S. economic growth in 2008 from 3.1 percent to 2.7 percent and forecast
higher unemployment, reflecting turmoil in the credit markets and residential real-estate market. The Bush Administration economic advisers also revised their unemployment outlook and predict the unemployment rate could rise slightly above 5 percent, up from the current unemployment rate of 4.6 percent.<ref>{{cite news |title=Bush Advisers Reduce Growth Forecast for 2008 to 2.7% |date=2007-11-04| work=[[Bloomberg L.P.|Bloomberg]] |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=awEbVLpYgqog&refer=home |accessdate=2008-03-17}}</ref>
Others speculate on the negative impact of the retirement of the [[Baby Boom]] generation and the relative cost to rent on the declining housing market.<ref> {{cite news |last=Fletcher |first=June |title=Slowing Sales, Baby Boomers Spur a Glut of McMansions |work=[[The Wall Street Journal]] |date=2006-07-19 |url=http://www.realestatejournal.com/buysell/markettrends/20060619-fletcher.html }}</ref><ref>{{cite news |title=It Was Fun While It Lasted |date=2006-09-05 |work=[[The New York Times]] |url=http://www.nytimes.com/2006/09/05/opinion/05tue2.html }}</ref> In many parts of the United States, it is significantly cheaper to rent the same property than to purchase it; the national [[median]] mortgage payment is $1,687 per month, nearly twice the [[median]] rent payment of $868 per month.<ref name="USAT rent">{{cite news |title=For some, renting makes more sense |work=[[USA Today]] |date=2006-08-10 |url=http://www.usatoday.com/money/perfi/housing/2006-08-09-rent-1a-usat_x.htm }}</ref> However, the appreciation of home prices in many parts of the country has lured many renters to become homeowners. Yet the appreciation of home values far exceeded the income growth of many of these
homebuyers, pushing them to leverage themselves beyond their means. They borrowed even more money in order to purchase homes that were far more expensive than their ability to meet their mortgage obligations. Many of these homebuyers took out adjustable-rate mortgages during the period of low interest rates to purchase homes of their dreams. Initially, they were able to meet their mortgage obligations due to their low "teaser" rates in the first few years. However, as the Federal Reserve Bank exercised monetary contraction policy in 2005, many homeowners were stunned when their adjustable-rate mortgages began to reset to much higher rates in mid-2007 and their monthly payments jumped far above their ability to meet the monthly mortgage payments. Some homeowners began to default on their mortgages in mid-2007 and the cracks in the U.S. housing foundation began to appear.
===Subprime mortgage industry collapse===
{{main|2007 Subprime mortgage financial crisis}}
[[Image:1378965141 7817eb7212 o.jpg|thumb|right|300px|Bank run on the U.K.'s [[Northern Rock]] Bank by customers queuing to withdraw savings in a panic related to the U.S. subprime crisis.]]
In March 2007, the United States' [[subprime lending|subprime]] mortgage industry [[Subprime mortgage crisis|collapsed]] due to higher-than-expected home [[foreclosure]] rates, with more than 25 subprime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale.<ref name="BW mortgage meltdown">{{cite news |title=The Mortgage Mess Spreads |date=2007-03-07 |work=[[BusinessWeek]] |url=http://www.businessweek.com/investor/content/mar2007/pi20070307_505304.htm?chan=rss_topStories_ssi_5 }}</ref> The stock of the country's largest subprime lender, [[New Century Financial]], plunged 84% amid [[US Department of Justice|Justice Department]] investigations, before ultimately filing for [[Chapter 11]] bankruptcy on April 2, 2007 with liabilities exceeding $100 million.<ref>{{cite news |title=New Century Financial files for Chapter 11 bankruptcy |date=2007-04-02 |work=[[MarketWatch]] |url=http://www.marketwatch.com/news/story/new-century-financial-files-chapter/story.aspx?guid=%7BB6C60623-1D41-4209-A347-4BEA486963D2%7D&dist=rss&siteid=mktw }}</ref> The manager of the world's largest bond fund [[PIMCO]], warned in June 2007 that the subprime mortgage crisis was not an isolated event and will eventually take a toll on the economy and whose ultimate impact will be on the impaired prices of homes.<ref name="CNN PIMCO not isolated">{{cite news |title=PIMCO's Gross |date=2007-06-27 |work=[[CNNMoney.com]]
|url=http://money.cnn.com/2007/06/26/news/economy/bc.usa.markets.gross.reut/?postversion=2007062616 }}</ref> [[Bill Gross]], a "most reputable financial guru",<ref name="RGE tramp stamp"/> sarcastically and ominously criticized the [[Moody's|credit ratings]] of the mortgage-based [[Collateralized debt obligation|CDO]]s now facing collapse: <blockquote>AAA? You were wooed Mr. [[Moody's]] and Mr. [[Standard & Poor's|Poor's]], by the makeup, those six-inch hooker heels, and a "[[tramp stamp]]." Many of these good looking girls are not high-class assets worth 100 cents on the dollar... [T]he point is that there are hundreds of billions of dollars of this toxic waste... This problem [ultimately] resides in America's heartland, with millions and millions of overpriced homes".<ref name="RGE tramp stamp">{{cite news |title=When mainstream analysts compare CDOs to 'subslime', 'toxic waste' and 'six-inch hooker heels'... |date=2007-06-27 |publisher=RGE Monitor
|url=http://www.rgemonitor.com/blog/roubini/202280 }}</ref></blockquote>
Business week has indicated financial analysts predicting that the subprime mortgage market meltdown would result in earnings reductions for large [[Wall Street]] investment banks trading in [[Mortgage-backed security|mortgage-backed securities]], especially [[Bear Stearns]], [[Lehman Brothers]], [[Goldman Sachs]], [[Merrill Lynch]], and [[Morgan Stanley]].<ref name="BW mortgage meltdown"/> The solvency of two troubled [[hedge funds]] managed by [[Bear Stearns]] was imperiled in June 2007 after [[Merrill Lynch]] sold off assets seized from the funds and three other banks closed out their positions with them. The Bear Stearns funds once had over $20 billion of assets, but lost billions of dollars on securities backed by subprime mortgages.<ref>{{cite news |title=Merrill sells off assets from Bear hedge funds |date=2007-06-21 |work=[[Reuters]] |url=http://www.reuters.com/article/gc06/idUSN2024502520070621 }}</ref> [[H&R Block]] reported that it made a quarterly loss of $677 million on discontinued operations,
which included subprime lender [http://www.oomc.com/ Option One], as well as writedowns, loss provisions on mortgage loans and the lower prices available for mortgages in the secondary market for mortgages. The unit's net asset value fell 21% to $1.1 billion as of [[April 30]], [[2007]].<ref>{{cite news |title=H&R Block struck by subprime loss |date=2007-06-21 |work=[[Financial Times]] |url=http://www.ft.com/cms/s/2485fd88-1ffa-11dc-9eb1-000b5df10621.html }}</ref> The head of the mortgage industry consulting firm Wakefield Co. warned, "This is going to be a meltdown of unparalleled proportions. Billions will be lost." [[Bear Stearns]] pledged up to US$3.2 billion in loans on June 22, 2007 to bail out one of its hedge funds that was collapsing because of bad bets on subprime mortgages.<ref name="NYT hedge crisis">{{cite news |title=$3.2 Billion Move by Bear Stearns to Rescue Fund |date=2007-06-23 |work=[[The New York Times]] |url=http://www.nytimes.com/2007/06/23/business/23bond.html }}</ref> [[Peter
Schiff]], president of Euro Pacific Capital, argued that if the bonds in the [[Bear Stearns]] funds were auctioned on the open market, much weaker values would be plainly revealed. Schiff added, "This would force other hedge funds to similarly mark down the value of their holdings. Is it any wonder that Wall street is pulling out the stops to avoid such a catastrophe?... Their true weakness will finally reveal the abyss into which the housing market is about to plummet."<ref>{{cite news |title=Bear Stearns Hedge Fund Woes Stir Worry In CDO Market |first=Leslie |last=Wines |date=2007-06-21 |work=[[MarketWatch]] |url=http://www.marketwatch.com/news/story/bear-stearns-hedge-fund-woes/story.aspx?guid=%7B11C86668-22D1-4D93-BE09-62E7B0EA6C67%7D }}</ref> The ''[[New York Times]]'' report connects this hedge fund crisis with lax lending standards: "The crisis this week from the near collapse of two hedge funds managed by Bear Stearns stems directly from the slumping housing market and the fallout from loose lending
practices that showered money on people with weak, or subprime, credit, leaving many of them struggling to stay in their homes."<ref name="NYT hedge crisis"/>
On 9 August 2007, [[BNP Paribas]] announced that it could not fairly value the underlying assets in three funds as a result of exposure to U.S. [[subprime lending|subprime]] mortgage lending markets.<ref>{{cite press release |title=BNP Paribas Investment Partners temporally suspends the calculation of the Net Asset Value of the following funds: Parvest Dynamic ABS, BNP Paribas ABS EURIBOR and BNP Paribas ABS EONIA |date=2007-08-09 |url=http://www.bnpparibas.com/en/news/press-releases.asp?Code=LPOI-75W9PV }}</ref> Faced with potentially massive (though unquantifiable) exposure, the [[European Central Bank]] (ECB) immediately stepped in to ease market worries by opening lines of €96.8 billion (US$130 billion) in low-interest credit.<ref>{{cite news |title=Big French Bank Suspends Funds |date=2007-08-09 |work=[[The New York Times]] |url=http://www.nytimes.com/2007/08/10/business/worldbusiness/09cnd-eurobank.html }}</ref> One day after the financial panic about a credit crunch swept through Europe, U.S.
Federal Reserve Bank conducted an "[[Open market operations|open market operation]]" to inject US$38 billion in temporary reserves into the system to help overcome the ill effects of a spreading credit crunch, on top of a similar move the day before.<ref name="Forbes Fed acts">{{cite news |title=Fed Acts to Stem Credit Turmoil |date=2007-08-10 |work=[[Forbes]] |url=http://www.forbes.com/feeds/ap/2007/08/10/ap4009183.html }}</ref> In order to further ease the credit crunch in the U.S. credit market, the chairman of the Federal Reserve Bank [[Ben Bernanke]] decided to lower the discount window rate, which is the lending rate between banks and the Federal Reserve Bank, by 50 basis points to 5.75% from 6.25% at 8:15 a.m. on [[August 17]], [[2007]]. The Federal Reserve Bank stated that the recent turmoil in the U.S. financial markets raised the risk of an economic downturn.
[[Image:Fed MBS Repo Purchases 2000-2007.png|300px|right|thumb|Federal Reserve Open Market Purchases of Repo Mortgage Backed Securities (MBS), 2000–2007. After the Federal Reserve Board's low-interest rate policies first contributed to inflating the bubble between 2001–2005,<ref name="BW burst"/> then higher rates and sharply increased foreclosures caused a crisis in the mortgage and credit markets, the Fed purchased an unprecedented US$38 billion dollars of [[Mortgage-backed security|mortgage-backed securities]] on 10 August 2007 in an effort to inject money and to calm the markets falling in response to concerns about this crisis.<ref name="Forbes Fed acts"/> <small>Source: [http://www.newyorkfed.org/markets/omo/dmm/historical/tomo/search.cfm New York Federal Reserve].</small>]]
In the wake of the mortgage industry meltdown, Senator [[Chris Dodd]], Chairman of the [[United States Senate Committee on Banking, Housing, and Urban Affairs|Banking Committee]] held hearings in March 2007 and asked executives from the top five subprime mortgage companies to testify and explain their lending practices; Dodd said, "predatory lending practices" endangered the home ownership for millions of people.<ref name="Reuters Dodd"/> Moreover, Democratic senators such as Senator [[Charles Schumer]] of New York are already proposing a federal government bailout of subprime borrowers, like the one use in the Savings and Loan crisis, in order to save homeowners from losing their residences. Opponents of such proposal assert that government bailout of subprime borrowers is not in the best interests of the U.S. economy because it will simply set a bad precedent, create a [[moral hazard]], and worsen the speculation problem in the housing market. As Dodd proposed a housing bailout to the Senate floor in June 2008 that would assist troubled subprime mortgage lenders such as [[Countrywide Bank]], Dodd admitted that he received special treatment, perks, and campaign donations from [[Countrywide Bank|Countrywide]], who regarded Dodd as a "special" customer and a "[[Angelo_Mozilo#.22Friends_of_Angelo.22_VIP_program|Friend of Angelo]]." Dodd received a $75,000 reduction in mortgage payments from Countrywide at allegedly below-market rates on his Washington, D.C. and Connecticut homes.<ref name="Countrywide's Many 'Friends'">{{cite news |date=2008-06-12 |title=Countrywide's Many 'Friends' |work=[[Conde Nast Portfolio]] |url=http://www.portfolio.com/news-markets/top-5/2008/06/12/Countrywide-Loan-Scandal }}</ref><ref name="Dodd Angelo's Angel">{{cite news |date=2008-06-19 |title=Angelo's Angel |work=[[Wall Street Journal]] |url=http://online.wsj.com/article/SB121383295591086669.html?mod=googlenews_wsj }}</ref> The Chairman of the [[Senate Finance Committee]] [[Kent Conrad]] and the head of head of [[Fannie Mae]] [[Jim Johnson]] also received mortgages on favorable terms due to their association with Countrywide CEO [[Angelo R. Mozilo]].<ref name="Countrywide's Many 'Friends'"/>
[[Lou Ranieri]] of [[Salomon Brothers]], inventor of the [[Mortgage-backed security|mortgage-backed securities]] market in the 1970s, warned of the future impact of mortgage defaults: "This is the leading edge of the storm. … If you think this is bad, imagine what it's going to be like in the middle of the crisis." In his opinion, more than $100 billion of home loans are likely to default when the problems in the subprime industry appear in the prime mortgage markets.<ref name="MSN real estate freeze">{{cite news |title=Next: The real estate market freeze |date=2007-03-12 |work=[[MSN Money]] |url=http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/NextTheRealEstateMarketFreeze.aspx }}</ref> Former Federal Reserve Chairman Alan Greenspan praised the rise of the subprime mortgage industry and the tools which it uses to assess credit-worthiness in an April 2005 speech.<ref>{{cite news |title=Remarks by Chairman Alan Greenspan, Consumer Finance At the Federal Reserve System's Fourth Annual Community Affairs
Research Conference, Washington, D.C. |author=[[Alan Greenspan]] |publisher=[[Federal Reserve Board]] |date=2005-04-04 |url=http://www.federalreserve.gov/BoardDocs/speeches/2005/20050408/default.htm }}</ref> Because of these remarks, along with his encouragement for the use of adjustable-rate mortgages, Greenspan has been criticized for his role in the rise of the housing bubble and the subsequent problems in the mortgage industry.<ref>{{cite news |title=The Great Unraveling |author=[[Stephen Roach]] |publisher=[[Morgan Stanley]] |date=2007-03-16 |url=http://www.morganstanley.com/views/gef/archive/2007/20070316-Fri.html |quote=In early 2004, he urged homeowners to shift from fixed to floating rate mortgages, and in early 2005, he extolled the virtues of sub-prime borrowing—the extension of credit to unworthy borrowers. Far from the heartless central banker that is supposed to 'take the punchbowl away just when the party is getting good,' Alan Greenspan turned into an unabashed cheerleader for the
excesses of an increasingly asset-dependent U.S. economy. I fear history will not judge the Maestro's legacy kindly. }}</ref><ref>{{cite news |title=Who is to Blame for the Mortgage Carnage and Coming Financial Disaster? Unregulated Free Market Fundamentalism Zealotry |author=[[Nouriel Roubini]] |publisher=RGE Monitor |date=2007-03-19 |url=http://www.rgemonitor.com/blog/roubini/184125 }}</ref> Greenspan later admitted about the subprime mortgage mess that, "I really didn't get it until very late in 2005 and 2006."<ref name="Greenspan didn't get it"/>
On September 13, 2007, the British bank [[Northern Rock]] applied to the [[Bank of England]] for emergency funds caused by liquidity problems related to the subprime crisis.<ref name="Northern Rock BoE">{{cite news |title=Northern Rock asks for Bank help |date=2007-09-13 |work=[[BBC News]] | url=http://news.bbc.co.uk/1/hi/business/6994099.stm }}</ref> This precipitated a [[bank run]] at Northern Rock branches across the UK by concerned customers who withdrew "an estimated £2bn withdrawn in just three days".<ref name="Northern Rock bank run">{{cite news |title=Banks remain under fire in London |date=2007-09-17 |work=[[Financial Times]]| url=http://www.ft.com/cms/s/0/0475e976-64f2-11dc-bf89-0000779fd2ac.html }}</ref>
===Alt-A mortgage problems===
Subprime and Alt-A loans (including "stated income" loans, which are loans made to home buyers without the verification of their incomes; as home buyers tend to overstate their incomes in order to get the loan amounts they desire to purchase their dream homes, the term "liar's loans" is often used to describe them) account for about 21 percent of loans outstanding and 39 percent of mortgages made in 2006.<ref name="NYT Alt-A loans">{{cite news |title=Defaults Rise in Next Level of Mortgages |date=2007-04-10 |work=[[The New York Times]] |url=http://www.nytimes.com/2007/04/10/business/10lend.html }}</ref> In April 2007, financial problems similar to the subprime mortgages began to appear with Alt-A loans made to homeowners who were thought to be less risky.<ref name="NYT Alt-A loans"/> [[American Home Mortgage]] said that it would earn less and pay out a smaller dividend to its shareholders because it was being asked to buy back and write down the value of Alt-A loans made to borrowers with decent credit;
causing company stocks to tumble 15.2 percent. American Home Mortgage filed for bankruptcy in August 2007.<ref name="Reuters AHM bankrupt">{{cite news |title=American Home Mortgage Gets Bankruptcy Court OK |date=2007-08-08 |work=[[Reuters]] |url=http://investing.reuters.co.uk/news/articleinvesting.aspx?type=bankingFinancial&storyID=2007-08-08T070054Z_01_N07275495_RTRIDST_0_SP_PAGE_012-N07275495-OISBN.XML }}</ref> The delinquency rate for Alt-A mortgages has been rising in 2007.<ref name="NYT Alt-A loans"/> In June 2007, [[Standard & Poor's]] warned that U.S. homeowners with good credit are increasingly falling behind on mortgage payments, an indication that lenders have been offering higher risk loans outside the [[Subprime lending|subprime market]]; they said that rising late payments and defaults on Alt-A mortgages made in 2006 are "disconcerting" and delinquent borrowers appear to be "finding it increasingly difficult to refinance" or catch up on their payments.<ref>{{cite news |title=Alt A Loans
'Disconcerting,' Jumbos Weaker, S&P Says|date=2007-06-27 |work=[[Bloomberg L.P.|Bloomberg]] |url=http://www.bloomberg.com/apps/news?pid=20601009&sid=aXDYv12DZNcc }}</ref> Late payments of at least 90 days and defaults on 2006 Alt-A mortgages have increased to 4.21 percent, up from 1.59 percent for 2005 mortgages and 0.81 percent for 2004, indicating that "subprime carnage is now spreading to near prime mortgages."<ref name="RGE tramp stamp"/>
===Foreclosure rates increase===
[[Image:Foreclosedhome.JPG|thumb|House in [[Salinas, California]] under foreclosure, following the burst of the U.S. real estate bubble.]]
The 30-year mortgage rates increased by more than a half a percentage point to 6.74 percent during May–June 2007, affecting borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the [[Great Depression]], and the [[National Association of Realtors|NAR]] reported that supply of unsold homes is at a record 4.2 million. [[Goldman Sachs]] and [[Bear Stearns]], respectively the world's largest securities firm and largest underwriter of mortgage-backed securities in 2006, said in June 2007 that rising foreclosures reduced their earnings and the loss of billions from bad investments in the [[subprime mortgage|subprime market]] imperiled the solvency of several [[hedge funds]]. Furthermore, a number of big commercial banks such as Citibank and investment banks such as Merrill Lynch have announced significant write-offs against 3rd and 4th quarter 2007 earnings. As a result, Citigroup's Board of Directors ousted its CEO Charles Prince and replaced him with Vikram Pandit, a former [[Morgan Stanley]] executive and hedge-fund manager, and Merrill Lynch's Board of Directors replaced its CEO Stanley O'Neal with John Thain, an alumni of [[Goldman Sachs]] and former CEO of NYSE Euronext. Mark Kiesel, executive vice president of a California-based Pacific Investment Management Co. said, <blockquote>It's a blood bath. ... We're talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.<ref name="Bloomberg bloodbath">{{cite news |title=Rate Rise Pushes Housing, Economy to 'Blood Bath' |date=2007-06-20 |work=[[Bloomberg L.P.|Bloomberg]] |url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=adDRCBB5fqZQ }}</ref></blockquote>
===Government bailouts===
{{see also|2008 GSE support plan}}
Many in the U.S. Congress and Administration are proposing government bailouts of the mortgage and credit crisis, similar to the Savings and Loan crisis of the 1980s. Critics of such proposals quickly rebuffed the idea of government bailouts and calling such bailouts irresponsible. They further argued that bailouts would only promote imprudence in the future.
Following the [[Subprime mortgage crisis|collapse]] of the [[subprime lending|subprime]] mortgage industry in March 2007, Democratic Senator [[Charles Schumer]] of New York proposed a federal government bailout of subprime borrowers in order to save homeowners from losing their residences (or to save big banks from losing billions of dollars with taxpayers' money).<ref name="Reuters Dodd"/>
He was a supporter of Savings and Loan bailout in 1989.<ref>{{cite news |url=http://www.time.com/time/magazine/printout/0,8816,957083,00.html |title=Special Report: The Savings And Loan Crisis |work=[[Time (magazine)|Time]] |date=1989-02-20 |accessdate=2008-03-17 |first=Barbara |last=Rudolph }}</ref> Others are quick to point out that such a "bailout" would primarily benefit lenders and [[Wall Street]] bankers, who make large campaign contributions to congressmen;<ref>{{cite news |title=Mortgage tightrope |date=2007-09-06 |work=[[Los Angeles Times]] |url=http://www.latimes.com/news/opinion/la-ed-mortgage6sep06,0,7508043.story?coll=la-opinion-leftrail }}</ref> [[Charles Schumer|Schumer]]'s top nine campaign contributors are all financial institutions who have contributed over $2.5 million to the senator.<ref name="Schumer top campaign contributors">{{cite web |url=http://www.opensecrets.org/politicians/allcontrib.asp?CID=N0000109 |title=Charles E. Schumer: Top Contributors |publisher=[[Center for Responsive
Politics]] |accessdate=2008-03-17 }}</ref> [[Charles Schumer|Schumer]] also proposed that the [[OFHEO]] raise [[Fannie Mae]] and [[Freddie Mac]]'s [[conforming loan]] ("affordable") limits from $417,000 to $625,000, thereby allowing these [[Government sponsored enterprise|GSE]]s to back mortgages on homes prices up to $780,000 with a 20% down payment.<ref name="Schumer OFHEO conforming loan $625,000">{{cite press release |publisher=[[Chuck Schumer|Senator Charles E. Schumer]] |url=http://www.senate.gov/%7Eschumer/SchumerWebsite/pressroom/record.cfm?id=282215 |title=Schumer To Introduce Legislation Today To Lift Portfolio Caps And Loan Limits For Fannie Mae And Freddie Mac |date=2007-09-10 |accessdate=2008-03-17 }}</ref>
On [[April 18]], [[2006]] home loan giant [[Freddie Mac]] has agreed to pay a record $3.8 million fine to settle allegations it made illegal campaign contributions.<ref>{{cite news |url=http://www.msnbc.msn.com/id/12373488/ |title=Freddie Mac pays record $3.8 million fine |publisher=[[Associated Press]] |work=[[MSNBC]] |date=2006-04-18 |accessdate=2008-03-17 }}</ref>
Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President Bush and [[Benjamin Bernanke|Fed Chairman Ben Bernanke]] to announce a limited bailout of the U.S. housing market for homeowners unable to pay their mortgage debts on August 31, 2007.<ref name="bailout"/> Mr. Bush said that his administration wished to alleviate the [[subprime mortgage crisis]] by "helping people who have good credit but who have not made all of their payments on time because of rising mortgage payments" with [[FHA-Secure]].<ref name="Olick WRONG">{{cite news |title=White House Has It all WRONG On Subprime |date=2007-08-31 |work=[[CNBC]] |url=http://www.cnbc.com/id/20533556 }}</ref> However, homeowners with [[subprime]] loans have poor credit by definition; therefore, the immediate intent and scope of Bush's announced plan is not entirely clear.<ref name="Olick WRONG"/> President Bush's largest campaign contributor was [[Roland E. Arnall]], the former CEO of the largest subprime lender in the U.S., [[Ameriquest]], which has since gone out of business;<ref name="Ameriquest done">{{cite news |title=Ameriquest closes, Citigroup buys mortgage assets |date=2007-08-31 |work=[[The Washington Post]] |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/08/31/AR2007083101702.html }}</ref> Bush nominated [[Roland E. Arnall|Arnall]] as the U.S. Ambassador to the [[Netherlands]].<ref name="Arnall Netherlands">{{cite news |title=Bush Picks Ameriquest Owner as Ambassador: Firm's Lending Tactics Investigated |date=2005-07-29 |work=[[The Washington Post]] |url=http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072801842.html }}</ref> On December 6, 2007, Bush announced a plan to voluntarily and temporarily freeze the introductory mortgage rates (so-called "teaser rate") of a limited number of mortgage debtors holding [[adjustable rate mortgage|ARM]]s for five years, declaring "I have a message for every homeowner worried about rising mortgage payments: The best you can do for your family is to call 1-800-995-HOPE".<ref name="800-995-HOPE">{{cite news |title=Bush: Dial 1-800-OOPS for housing help |date=2007-12-06 |work=[[Reuters]]
|url=http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-12-06T191403Z_01_N06236443_RTRIDST_0_USA-SUBPRIME-BUSH-NUMBER.XML |quote=Anyone who dialed 1-800-995-HOPE did not reach the mortgage hotline but instead contacted the Freedom Christian Academy—a Texas-based group that provides Christian education home schooling material. }}</ref> Government officials denied that this proposal is a bailout and acknowledged that it is not a panacea to cure the housing ailment. Treasury Secretary [[Henry Paulson]] admitted that there is no easy solutions to the housing problem and this plan provides more a temporary relief to homeowners facing mortgage-rate resets than a long-term solution to stabilize the housing market. However, some experts criticized this plan as "a Band-Aid when the patient needs major surgery",<ref name="Band-Aide">{{cite news |title=Putting a freeze to mortgage meltdown |date=2007-12-06 | work=[[Marketplace (radio program)|Marketplace]] |publisher=[[American Public Media]] |accessdate=2008-03-17 |url=http://marketplace.publicradio.org/display/web/2007/12/06/foreclosure_q/ }}</ref> a "teaser-freezer",<ref name="teaser-freezer">{{cite news |title=Experts see Bush mortgage fix as a bandage: Freezing adjustable rates won't stop many foreclosures, they say |date=2007-12-06 |work=[[MSNBC]] |url=http://www.msnbc.msn.com/id/22068498/ }}</ref> and a "bail-out"<ref name="raw deal">{{cite news |title=Those Who Avoided Risk Call Plan A Raw Deal |date=2007-12-06 |work=[[The Washington Post]] |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/12/06/AR2007120602572.html }}</ref> in which "the liars have won."<ref name="liars bail-out">{{cite news |title=Bail-out means the liars have won |date=2007-12-06 |work=[[The Age]] |url=http://business.theage.com.au/bailout-means-the-liars-have-won/20071207-1fqz.html }}</ref>
Whether the bursting of the U.S. housing bubble will become a partisan issue in the [[2008 presidential election]] is uncertain. During a live interview on CNBC with [[Maria Bartiromo]], New York Senator and 2008 Democratic Presidential Candidate [[Hillary Rodham Clinton]] suggested the government set up a $5 billion fund to assist homeowners on the brink of losing their homes.<ref>{{cite news |url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUrn5NyCsERU |title=Clinton Calls for Foreclosure Moratorium, Adjustable Rate Hold |first=Kristin |last=Jensen |work=[[Bloomberg L.P.|Bloomberg]] |date=2007-12-03 |accessdate=2008-03-17 }}</ref> Moreover, she argued that nationwide foreclosures would devastate communities and invite crimes into these neighborhoods. However, skeptics of such schemes questioned whether the $5 billion fund would be sufficient to help 1.4 million homeowners who are expected to lose their homes in 2008 and the first-half of 2009 once their "teaser" mortgage rates are reset to
variable market rates which could reach between 11 and 13 percent. On Jan 11, 2008, Democratic presidential contender Hillary Clinton proposed a $70 billion emergency spending package to help victims of the U.S. housing crisis.<ref>{{cite news |url=http://uk.reuters.com/article/oilRpt/idUKN1130029720080111 |title=Clinton proposes economic stimulus plan |work=[[Reuters]] |date=2008-01-11 |accessdate=2008-03-17 }}</ref> A potential conflict of interest might arise because Senator [[Hillary Clinton]] has been the recipient of major contributions from the mortgage banking industry<ref>{{cite web |url=http://www.opensecrets.org/industries/recips.asp?Ind=F4600&cycle=2006 |title=Mortgage Banking: Top 20 Recipients: 2006 |publisher=[[Center for Responsive Politics]] |accessdate=2008-03-17 }}</ref> and her strategist [[Mark Penn]] has been linked to [[Countrywide]] Mortgage, one of the major subprime lenders.<ref>{{cite news |url=http://abcnews.go.com/Politics/story?id=3694881 |work=[[ABC News]] |title=Edwards Likens
Clinton Strategist To Rove |first=Jake |last=Tapper |date=2007-10-05 |accessdate=2008-03-17 }}</ref>
Some economists say a [[Bail out (finance)|bail out]] will create a [[moral hazard]] that encourage future risky lending and borrowing by signaling that in extreme circumstances, the government will bail out bad lenders and borrowers<ref>{{cite news |url=http://www.npr.org/templates/story/story.php?storyId=16734629 |title=Subprime Bailout: Good Idea or 'Moral Hazard |first=Eric |last=Weiner |date=2007-11-29 |work=[[NPR]] }}</ref> They further argue that government bailouts will only encourage more speculative activities in markets other than housing. Such bailouts will prolong the inevitable consequences of the housing crisis and exacerbate other financial crisis in the future. They also asserted the taxpayers-funded bailout would merely assist real-estate speculators, irresponsible homebuyers, and mortgage fraudsters.
A September 2007 national poll by [[NBC News]] and the [[Wall Street Journal]] found widespread opposition to a bailout of subprime borrowers facing foreclosure, with 59% of respondents opposing a federal role in preventing foreclosures.<ref>{{cite web |url=http://www.pollingreport.com/life.htm |title=NBC News/Wall Street Journal Poll |date=March 7-10, 2008 |accessdate=2008-03-17 }}</ref> Most respondents argued that a government interference in private transactions between homebuyers and lenders would set a bad precedent. Some of them wondered whether the government could compel credit-card companies to freeze the introductory rates of zero percent initially offered to credit-card debtors when debtors got into trouble paying their credit-card bills. Economic experts opined that only market-based solutions would eventually solve the current housing problem. Any non-market-based solutions will only put artificial floor in housing prices across the nation. According to former Fed Chairman Alan Greenspan, the credit crunch in the financial market would not end until the inventory of homes on the market is liquidated and declines in residential real-estate prices played themselves out.<ref>{{cite news |url=http://money.cnn.com/2007/12/12/news/economy/greenspan/ |title=Greenspan says his Fed policy did not create housing bubble |date=2007-12-12 |work=[[CNNMoney.com]]}}</ref> In other words, supply of and demand for homes must first come to equilibrium before any recovery in U.S. housing market and, after enjoying the housing boom from 2002 to 2007, homeowners must sit through this subsequent housing bust patiently. As former Fed Chairman Alan Greenspan warned before he completed his tenure at the Federal Reserve Bank: <blockquote>Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk
premiums.<ref>{{cite web |url=http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2006/FF+March+2006.htm |title=Musings on Inflation Targeting |first=Paul |last=McCulley |publisher=PIMCO Bonds |date=2006-02-27 |accessdate=2008-03-17 }}</ref></blockquote>
Translated into plain English, risk-averse investors would demand higher yields on their investments, thus driving down asset prices especially highly leveraged assets such as real-estate. Therefore, homeowners must deleverage themselves by putting more equities into their homes in order to keep their homes and future homebuyers may have to deposit significant amounts of down-payment in order to get mortgage loans. The protracted period of Americans buying homes with zero down-payment and getting mortgage loans with no or little documentations has finally come to an abrupt end.
In June 2008 [[Conde Nast Portfolio]] reported that numerous Washington, DC politicians over recent years had received mortgage financing at noncompetitive rates from [[Countrywide Financial]] because the corporation considered for the officeholders under a program called "FOA's"—"[[Angelo_Mozilo#.22Friends_of_Angelo.22_VIP_program|Friends of Angelo]]."<ref name="Countrywide's Many 'Friends'"/> The politicians extended such favorable financing included the chairman of the [[Senate Banking Committee]], [[Democratic Party (United States)|Democrat]] [[Christopher Dodd]], and the chairman of the [[Senate Budget Committee]], [[Democratic Party (United States)|Democrat]] [[Kent Conrad]]. The article also noted Countrywide's [[political action committee]] had made large donations to Dodd's campaign.<ref name="Countrywide's Many 'Friends'"/> Dodd has received approximately $70,000 in campaign contributions from [[Bank of America]], who is buying Countrywide, in the last year-and-a-half before the Countrywide Financial loan scandal broke. <ref name="Bank of America Dodd">{{cite news |date=2008-06-19 |title=Bank of America PAC money behind Dodd's Countrywide loan |work=examiner |url=http://dealbreaker.com/2008/06/chris_dodd_the_senator_from_ba.php}}</ref> Democrat Senator Dodd proposed that the federal government buy up to $400 Billion in defaulted mortgages.<ref>{{cite news |title=Dodd Defends Housing Plan, Blasts Bush |date=[[7 May]] [[2008]] |work=[[Wall Street Journal]] | url=http://blogs.wsj.com/economics/2008/05/07/dodd-defends-housing-plan-blasts-bush/ }}</ref> It was reported that [[James A. Johnson (businessman)|Jim Johnson]], former CEO of Fannie Mae and an adviser to Sen. Barack Obama, had received loans under the "[[Angelo_Mozilo#.22Friends_of_Angelo.22_VIP_program|Friends of Angelo]]."<ref name="CFC Friends Loans">{{cite news |title=Countrywide Friends Got Good Loans |date=[[7 June]] [[2008]] |work=[[Wall Street Journal]] | url=http://online.wsj.com/article/SB121279970984353933.html?loc=interstitialskip }}</ref><ref name="Countrywide's Many 'Friends'"/>Only Senators [[Barack Obama]] and [[Hillary Clinton]] have received more Bank of America money than Senator Dodd. <ref name="Bank of America Dodd"/>
==See also==
*[[2007 Subprime mortgage financial crisis]]
*[[Subprime lending]]
*[[Mortgage loan]]
*[[Real estate bubble]]
*[[Economic crisis of 2008]]
*[[List of entities involved in 2007 finance crises]]
*'''The world housing bubble'''
**[[British property bubble]]
**[[Chinese property bubble]]
**[[Indian property bubble]]
**[[Irish property bubble]]
**[[Japanese asset price bubble]]
**[[New Zealand property bubble]]
**[[Romanian property bubble]]
**[[Russian property bubble]]
**[[Spanish property bubble]]
*[[Economic bubble]]
*[[Real estate pricing]]
*[[Real estate appraisal]]
*[[Real estate economics]]
*[[Real estate trends]]
*[[Creative Real Estate Investing]]
*[[Deed in lieu of foreclosure]]
*[[Foreclosure consultant]]
{{-}}
==References and notes==
{{reflist|2}}
==Further reading==
* {{cite news |work=[[The Economist]] |date=2005-12-08 |title=Hear that hissing sound? |url=http://www.economist.com/finance/PrinterFriendly.cfm?story_id=5283797 }}
* {{cite news |work=[[The Economist]] |date=2005-06-16 |title=After the fall |url=http://www.economist.com/opinion/displayStory.cfm?story_id=4079458 }}
* {{cite news |work=[[The Economist]] |date=2005-06-16 |title=In come the waves |url=http://www.economist.com/opinion/displaystory.cfm?story_id=4079027 }}
* {{cite news |work=[[The Economist]] |date=2005-04-20 |title=Will the walls come falling down? |url=http://www.economist.com/agenda/displayStory.cfm?story_id=3886356 }}
* {{cite news |work=[[The Economist]] |date=2005-05-03 |title=Still want to buy? |url=http://www.economist.com/finance/displayStory.cfm?story_id=3722894 }}
* {{cite news |work=[[The Economist]] |date=2004-02-26 |title=The American economy: A phoney recovery |url=http://www.economist.com/finance/displayStory.cfm?story_id=2461875 }}
* {{cite news |work=[[The Economist]] |date=2003-05-29 |title=House of cards |url=http://www.economist.com/displayStory.cfm?Story_id=1794873 }}
* {{cite news |work=[[The Economist]] |date=2002-05-28 |title=Going through the roof |url=http://www.economist.com/opinion/displaystory.cfm?story_id=1057057 }}
* {{cite news |work=[[The New York Times]] |date=2005-12-25 |url=http://www.nytimes.com/2005/12/25/business/yourmoney/25japan.html |title=Take It From Japan: Bubbles Hurt }}
* {{cite news |work=[[The Wall Street Journal]] |date=2006-02-10 |url=http://www.realestatejournal.com/columnists/housetalk/20060210-fletcher.html |title=Is the Party Really Over For the Housing Boom? |author=[[June Fletcher]] }}
* {{cite news |author=[[Dean Baker]] |date=July 2005 |title=The Housing Bubble Fact Sheet |url=http://www.cepr.net/publications/housing_fact_2005_07.pdf |format=PDF |publisher=[http://www.cepr.net/ Center for Economic and Policy Research] }}
* [[June Fletcher]] (2005), ''House Poor: Pumped Up Prices, Rising Rates, and Mortgages on Steroid - How to Survive the Coming Housing Crisis'', New York: Collins. ISBN 0-06-087322-1.
* [[Fred E. Foldvary]] (1997), "[http://www.foldvary.net/works/geoaus.html The Business Cycle: A Georgist-Austrian Synthesis]," ''American Journal of Economics and Sociology'' 56(4):521–41, October.
* [[Fred E. Foldvary]] (2007), ''The Depression of 2008'', Berkeley: The Gutenberg Press. ISBN 0-9603872-0-X.
* {{cite news |author=[[Paul Krugman]] |date=2006-08-25 |title=Housing Gets Ugly | work=[[The New York Times]] |url=http://query.nytimes.com/gst/fullpage.html?res=9C05E1D6133EF936A1575BC0A9609C8B63 }}
* [[N. Gregory Mankiw]] and David N. Weil (1989). "[http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V89-458X25J-5&_coverDate=05%2F31%2F1989&_alid=419372230&_rdoc=1&_fmt=&_orig=search&_qd=1&_cdi=5865&_sort=d&view=c&_acct=C000057242&_version=1&_urlVersion=0&_userid=2425064&md5=ebb68aba7d4796869072535dc3368f64 The baby boom, the baby bust, and the housing market]", ''Regional Science and Urban Economics'', Vol.19, No.2, May 1989, pp.235-258.
* John R. Talbott (2006). ''Sell Now!: The End of the Housing Bubble'', New York: St. Martin's Griffin. ISBN 0-312-35788-5.
* John R. Talbott (2003). ''The Coming Crash in the Housing Market'', New York: McGraw-Hill. ISBN 0-07-142220-X.
* [[Elizabeth Warren]] and Amelia Warren Tyagi (2003). ''The Two-Income Trap: Why Middle Class Mothers and Fathers are Going Broke'', New York: Basic Books. ISBN 0-465-09082-6.
* {{cite news |author=Robert J. Samuelson |date=2006-10-11 |title=Home Is Where the Worry Is |work=[[The Washington Post]] |url=http://www.washingtonpost.com/wp-dyn/content/article/2006/10/10/AR2006101001284.html }}
==External links==
* [http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html Buy vs. Rent Calculator] - from [[The New York Times]].
* [http://www.cepr.net Center for Economic and Policy Research] - CEPR regularly releases reports on the U.S. Housing Bubble.
* [http://www.cnbc.com/id/15837671/ Reality Check with Diana Orlick] - from [[CNBC]].
* [http://www.ofheo.gov/ Office of Federal Housing Enterprise Oversight] - Quarterly Government Appreciation Statistics (Statewide)]
* Housing bubble weblogs, cited in ''BusinessWeek'', ''Chicago Tribune'', ''CNN/Money'', ''Newsweek'', ''Salon'', ''San Francisco Chronicle'', ''Times'' (Trenton, N.J.), ''Wall Street Journal'', ''Washington Post'', ''Motley Fool'':
:* [http://thehousingbubbleblog.com/ The Housing Bubble Blog] - blog.<ref name="NW bubble bloggers"/><ref name="Chicken Littles revenge">{{cite news |title=Chicken Little's revenge |date=2006-08-19 |work=[[Salon magazine|Salon]] |url=http://www.salon.com/tech/htww/2006/09/19/lereah_watch/ }}</ref><ref name="SFC bubble bloggers">{{cite news |last=Lloyd |first=Carol |title=As bubble sags, market critics are busting out |date=2006-11-05 |work=[[San Francisco Chronicle]] |url=http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/05/REG7DM52OS1.DTL }}</ref> - Ben Jones's news-oriented blog.
:* [http://housingpanic.blogspot.com/ Housing Panic] - blog,<ref name="raw deal"/><ref name="NW bubble bloggers"/><ref name="Fool Harvard JCHS"/> broke the [http://iamfacingforeclosure.com/ iamfacingforeclosure.com] "liar loan" story.<ref name="fool.com Casey Serin">{{cite news |title=24 Years Old, $2 Million in the Hole |date=2006-09-25 |work=[[Motley Fool]] |url=http://aol.fool.com/news/commentary/2006/commentary06092517.htm }}</ref>
:* [http://bubblemeter.blogspot.com/ Bubble Meter] - blog.<ref name="WP bubble bench"/><ref name="NW bubble bloggers"/>
:* [http://calculatedrisk.blogspot.com/ Calculated Risk] - blog.<ref name="NW bubble bloggers"/>
:* [http://www.patrick.net/ patrick.net] - blog.<ref name="NW bubble bloggers"/><ref name="SFC bubble bloggers"/><ref name="gloating renters">{{cite news |title=Renters gloat over housing slump |date=2006-12-26 |work=[[The Wall Street Journal]] |url=http://www.moneyweb.co.za/shares/international_news/535987.htm }}</ref>
:* [http://www.piggington.com/ Professor Piggington] - blog.<ref name="NW bubble bloggers"/><ref name="SFC bubble bloggers"/>
:* [http://njrereport.com/ New Jersey Housing Bubble] - blog.<ref name="NW bubble bloggers"/>
:* [http://www.housebubble.com/ House Bubble] - blog.<ref name="NW bubble bloggers"/><ref>{{cite news |title=My turn: The renter who blogs on real estate |date=2006-11-02 |work=The Times (Trenton) |url=http://www.nj.com/business/times/index.ssf?/base/business-1/1162444129165180.xml&coll=5&thispage=1 }} Not available, 2008-03-17.</ref>
:* [http://davidlereahwatch.blogspot.com/ David Lereah Watch] - blog,<ref name="CT Lereah Watch"/><ref name="Chicken Littles revenge"/><ref>{{cite news |last=Coy |first=Peter |title=Oh, the Humanity! |date=2006-10-28 |work=[[BusinessWeek]] |url=http://www.businessweek.com/the_thread/hotproperty/archives/2006/10/oh_the_humanity.html?campaign_id=rss_blog_hotproperty }}</ref><ref name="SFC bubble bloggers"/><ref name="gloating renters"/> monitors the statements of [[National Association of Realtors]].
:* [http://matrix.millersamuel.com/ Matrix] - blog.<ref name="Blog if you love real estate">{{cite news |title=Blog if you love real estate |date=2006-01-19 |work=[[CNNMoney.com]] |url=http://money.cnn.com/2006/01/19/real_estate/blogging_for_real_estate/ }}</ref>
:* [http://www.housingbubblecasualty.com/ Housing Bubble Casualty] - blog.<ref name="Blogs from the financial front">{{cite news |title=Blogs from the Financial Front |date=2006-03-29 |work=[[CNNMoney.com]] |url=http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/04/01/8373319/ }}</ref>
:* [http://paper-money.blogspot.com/ Paper-Money] - blog,<ref name="When Bubbles Attack!">{{cite news |title=When Bubbles Attack! |date=2006-09-19 |work=[[Motley Fool]] |url=http://www.fool.com/news/mft/2006/mft06091929.htm }}</ref> also streams video of the [[United States Senate Committee on Banking, Housing, and Urban Affairs|Senate Banking Committee]]'s housing bubble hearings,<ref name="Senate hearings"/> publishes ''[http://www.paperdinero.com/BNN.aspx Bubble News Network]'' and ''[http://www.paperdinero.com/Times.aspx Bubble Times].''
[[Category:United States housing bubble| ]]
[[Category:Real estate bubbles]]
[[Category:Economic history of the United States]]
[[Category:Financial economics]]
[[Category:Interest rates]]
[[fr:Bulle immobilière américaine des années 2000]]