The United States Housing Bubble Crisis

2005 Words Dec 7th, 2015 9 Pages
6.3 TRILLION DOLLARS! This is how much the value of homes have fallen in the United States since its real estate peak back in July of 2006. After the price of houses peaked in 2006, they gradually started to decline until December 30th, 2008. This is when the Case-Shiller home price index which measured the value of homes, reported its largest price decrease in its entire history. From there we saw prices continue to decline until we hit all-time lows in 2012. The United States housing bubble burst will be talked about for years to come including many what caused it and how to prevent such occurrences in the future. Low interest rates, Housing bubble, subprime mortgages, as well as securitization all contributed to the housing market crash of 2008 and will all be explained in this paper. According to the general consensus, most people believe that the housing bubble was the main cause of the 2007-2009 economic recession in the United States of America.
LOW INTEREST RATES
Mortgage rates in the United States hit an all-time high in the early 1980’s at 18% in order to combat and push inflation out of the economy. Over the next 20-25 years, interest rates continued to fall and even fell below 6% in 2002. Although there was a large amount of debt going on in the United States at the time with little to no saving habits, interest rates were kept low by large amounts of investments into the U.S housing markets from outside countries like China, Japan, Brazil and the United…

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