StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

The US Real Estate Bubble - Research Paper Example

Cite this document
Summary
The paper "The US Real Estate Bubble" argues housing bubble in the US has been caused by a number of factors. Since 1997, the prices of houses started to increase until they reached a peak in 2006. During this time, the annual increase in home prices in the US was at 124% and above…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.7% of users find it useful
The US Real Estate Bubble
Read Text Preview

Extract of sample "The US Real Estate Bubble"

The cost of a home in almost any state in the United States of America was overpriced by at least two hundred percent. As a result, the middle-income earners could not afford to buy houses with their income, and the only way to buy a house was to secure a mortgage from a bank. As more and more people used mortgages to buy houses, the demand for houses increased, only resulting in a further increment in home prices.

The other thing was that the mortgage providers failed to include due diligence while providing these mortgages. While these mortgage providers advertised strict terms and conditions, these terms and conditions were never applied when giving out mortgages and as a result, many people who were not eligible for such mortgages ended up in the client lists of such banks. When the demand /supply forces forced the interest rates of the mortgages to start fluctuating, most of these mortgage owners started finding it harder to finance their mortgages and some of them had to start refinancing their mortgages. This meant that they had to take a loan to pay their mortgage. In such an arrangement, the problem was that the mortgage owners ended up paying interest twice. This is because the mortgage owners would have to pay for the mortgage as well as the interests on loans.

The very fact that a majority of the mortgage owners were seeking refinancing for their mortgages meant that the real estate industry was already facing major problems. Most of these frustrated homeowners started selling off their homes but at much lower prices than they had secured the homes, and the real estate market was flooded with supply. Those who could not afford to sell the homes were forced to foreclose. Many banks were left with no choice but to foreclose thousands of homes to reduce their losses. Even as the banks foreclosed the homes, they had to resell the houses at very low prices, which led to a number of factors. One, the real estate suffered even more flooding and any remaining demand for homes would now be met by the foreclosed homes that were selling at much lower prices. As a result, the real estate started collapsing from two ends, namely the financing and real estate development side. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“On a national level why describe why the Real Estate market crashed, Research Paper”, n.d.)
On a national level why describe why the Real Estate market crashed, Research Paper. Retrieved from https://studentshare.org/miscellaneous/1602927-on-a-national-level-why-describe-why-the-real-estate-market-crashed-what-contributed-to-the-crash-of-the-market-is-the-market-recovering-and-what-is-contributing-to-the-recovery
(On a National Level Why Describe Why the Real Estate Market Crashed, Research Paper)
On a National Level Why Describe Why the Real Estate Market Crashed, Research Paper. https://studentshare.org/miscellaneous/1602927-on-a-national-level-why-describe-why-the-real-estate-market-crashed-what-contributed-to-the-crash-of-the-market-is-the-market-recovering-and-what-is-contributing-to-the-recovery.
“On a National Level Why Describe Why the Real Estate Market Crashed, Research Paper”, n.d. https://studentshare.org/miscellaneous/1602927-on-a-national-level-why-describe-why-the-real-estate-market-crashed-what-contributed-to-the-crash-of-the-market-is-the-market-recovering-and-what-is-contributing-to-the-recovery.
  • Cited: 0 times

CHECK THESE SAMPLES OF The US Real Estate Bubble

Should the Fed Intervene in Asset Bubbles

Prior to that, specifically in the period between years 2000 to 2006, residential housing prices in the us almost doubled.... Since hindsight offers perfect or a 20/20 vision, many people opined the us central bank failed in its task to promote healthy and sustainable economic growth for the country, and by extension of being a multi-trillion dollar economy, for the entire world.... the us housing market is a good example of the first cause cited above in creating a bubble....
46 Pages (11500 words) Thesis

Argument of After Shock

In their point of view the US economy comprises of six bubbles, “These bubbles included: the real estate bubble, stock market bubble, discretionary spending bubble, dollar bubble, and government debt bubble” (5).... The real estate or the housing bubble was the first pillar of the economic system that collapsed because the price and expenditures of making a new house increased greatly and outpaced the increase in an individual's salary and eventually its decline started in 2006 and hence resulted in the rest of the downfall of the economic system....
7 Pages (1750 words) Essay

Corporate Malfeasance in Lehman Brothers

The US Housing/ Subprime Mortgage Crisis Economic experts link Lehman's predicament to the bursting the housing or real estate market bubble in the U.... In 2007, the real estate market in the U.... had registered a remarkable progress amid the housing bubble....
6 Pages (1500 words) Term Paper

The 2007 Real Estate Market Crash

This research paper looks at the recent drop in real estate market prices that is taking place in the U.... The drop in real estate market prices is not an isolated event.... .... the reasons that led to it, why and how it happened, its possible effects on the U....
11 Pages (2750 words) Research Paper

Is China in an asset bubble Yes or no Why or why not (Particularly real estate bubble)

China's real estate bubble Causing Growing Concern.... An asset bubble comes into being when specific asset classes' prices become over-inflated because of such asset(s)' excessive demand as a vehicle of investment.... Supply shortage and/or a money supply over-expansion aggravate an asset bubble but demand-pull inflation account for majority of the modern asset bubbles (Amadeo Para 1). ... ccording to Fan Gang, the central bank advisor, China is one of the emerging markets that College: Is China in an asset bubble?...
1 Pages (250 words) Assignment

China Housing Bubble

The paper "China Housing Bubble" informs that most economic observers believe that the Chinese economy is being spurred by a real estate bubble, most likely caused by the fiscal stimulus package and credit expansion which has been observed in the country.... However, although increasing house prices may indicate a bubble, is existence is still debatable.... A burst in the house price bubble can present major destabilization in the economy....
40 Pages (10000 words) Dissertation

The Theory of Credit Boom Bubble

Usually, it takes place in securities, real estate and stock markets.... Usually, it takes place in securities, real estate and stock markets.... This essay "Economic Bubbles" discusses the theory of credit boom bubble that says that the prices of assets and securities will keep rising above the real value till the time when prices fall and bubble bursts.... different perspective can be seen from the bubble effect....
7 Pages (1750 words) Essay

The IMFs Influence in Global Financial Governance

"The IMF's Influence in Global Financial Governance" paper argues that the governments of the member countries are not interested in assessing the performance of the agency, particularly when the costs of convincing other members state that reforms are important are substantial.... ... ... ... To be effective, ex-ante conditionality must be universal and mandatory....
12 Pages (3000 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us