Difference between revisions of "Housing boom"
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(New page: The '''housing boom''' of the early 2000s turned into a burst bubble, thanks to shortsighted economic policies. :Buyers bought houses they couldn't afford, believing they could refinance...) |
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:The Fed's sharp, prolonged reduction in interest rates stimulated a housing market that was already booming -- triggering six years of double-digit increases in housing prices during a period when the general inflation rate was low. [http://www.heartland.org/article/24759/Deregulation_and_the_Financial_Panic_Loose_Money_and_Politicized_Mortgages_Are_the_Real_Villains.html] | :The Fed's sharp, prolonged reduction in interest rates stimulated a housing market that was already booming -- triggering six years of double-digit increases in housing prices during a period when the general inflation rate was low. [http://www.heartland.org/article/24759/Deregulation_and_the_Financial_Panic_Loose_Money_and_Politicized_Mortgages_Are_the_Real_Villains.html] | ||
| − | See [[Recession of 2008] | + | See [[Recession of 2008]] |
Revision as of 15:46, March 10, 2009
The housing boom of the early 2000s turned into a burst bubble, thanks to shortsighted economic policies.
- Buyers bought houses they couldn't afford, believing they could refinance in the future and benefit from the ongoing appreciation. Lenders assumed that even if everything else went wrong, properties could still be sold for more than they cost and the loan could be repaid.
Why did this happen?
- The Fed's sharp, prolonged reduction in interest rates stimulated a housing market that was already booming -- triggering six years of double-digit increases in housing prices during a period when the general inflation rate was low. [1]