As stated earlier, a housing bubble is a quick incline in housing prices over an extended period of time, but why was this housing bubble is worse than ones our economy had been through in the past. During the time period of 1995 to 1999 the United States housing market grew at a slow rate but it was a constant and consistent slow rate. This trend changed when the stock market crashed in March of 2000. The way people were investing their money after the crash changed, instead of putting their money into stocks and numbers that they couldn’t see, hold or trust, people started to invest their money into other assets that were more safe and tangible, the largest of those being new homes. Due to the stock market crash and the following economic
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First time Home buyers couldn’t afford homes, mortgage rates grew by roughly 1 percent, the affordability of home was decreasing and investors left the market and roughly 10 years of growth was erased over the 3 years from 2005 to 2008(Byun,2010). This caused the housing market crash and the housing bubble to “burst”. This crash has affected our nation and our economy in many ways and even 9 years later, it affects are still showing. By one Federal Reserve estimate, the Untied States lost almost a year’s worth of economic activity, which is close to 14 trillion dollars, during the bubble burst that caused an economic recession from 2007 to 2009. The recession caused spending all over the country to go down, which in result made unemployment rates rise and economic growth slow down. Home ownership rates are still down from what they were before the market crash and renter rates are up. Between the Midwest and the south together, they lost manufacturing jobs at a national rate of 34% from 2000 to 2010. The government had massive spending cuts which affected many programs including the education system. State worker’s jobs were cut, 681,000 in fact, just since their peak in August of 2008 until September 2013. Unemployment rates skyrocketed and jobless claims grew from an average of 321,000 per week in 2007 to about 670,000 at its peak in March of …show more content…
“Many banks around the world, including Canadian ones, have done a good job of controlling their risks, while governments are gradually getting to grips with the problem banks” (Calverley,2008). Financial institutions are more regulated and governed as well so that it will help another bubble like this from occurring and eventually bursting. The 2008 housing market crash was one of the worst economic disasters our economy has seen, and a very expensive learning lesson for our Country. We can only hope that what our country learned from this will keep history from repeating
First time Home buyers couldn’t afford homes, mortgage rates grew by roughly 1 percent, the affordability of home was decreasing and investors left the market and roughly 10 years of growth was erased over the 3 years from 2005 to 2008(Byun,2010). This caused the housing market crash and the housing bubble to “burst”. This crash has affected our nation and our economy in many ways and even 9 years later, it affects are still showing. By one Federal Reserve estimate, the Untied States lost almost a year’s worth of economic activity, which is close to 14 trillion dollars, during the bubble burst that caused an economic recession from 2007 to 2009. The recession caused spending all over the country to go down, which in result made unemployment rates rise and economic growth slow down. Home ownership rates are still down from what they were before the market crash and renter rates are up. Between the Midwest and the south together, they lost manufacturing jobs at a national rate of 34% from 2000 to 2010. The government had massive spending cuts which affected many programs including the education system. State worker’s jobs were cut, 681,000 in fact, just since their peak in August of 2008 until September 2013. Unemployment rates skyrocketed and jobless claims grew from an average of 321,000 per week in 2007 to about 670,000 at its peak in March of …show more content…
“Many banks around the world, including Canadian ones, have done a good job of controlling their risks, while governments are gradually getting to grips with the problem banks” (Calverley,2008). Financial institutions are more regulated and governed as well so that it will help another bubble like this from occurring and eventually bursting. The 2008 housing market crash was one of the worst economic disasters our economy has seen, and a very expensive learning lesson for our Country. We can only hope that what our country learned from this will keep history from repeating