When a mirror is broken, the guilty party is in for seven years of bad luck; similarly, when a home undergoes foreclosure, the homeowner is in for seven years of bad credit. Nearly 2 million homes went into foreclosure during the real estate and mortgage meltdown. After seven years of piecing together their credit, many of these former homeowners qualify for a mortgage again. These potential buyers are referred to as boomerang buyers. Despite the repair of their credit, the shattering of their original credit still haunts them. Moving forward, these so-called boomerang buyers will utilize lessons learned from the real estate crash.
The broken mirror is able to be replaced because there is more than one mirror in the world. The number of mirrors in the world can be counted, just like money. Lenders and borrowers learned money is finite in quantity. Borrowers took on mortgages, but were unable to make the payments. When their homes went into foreclosure, borrowers had less money to spend on anything, including …show more content…
At first glance, this appears to be a wonderful investment, but how can we be sure the housing market will not crash once again? To answer this question, let’s break down the housing market of 2007 (the year of the crash) into all the different components.
The stock market crash of 2000 caused a shift in wealth to the housing market; as a result, the base of the housing market was built on “cheap” mortgages that finance institutions were able to issue. The frame was mostly made up of the middle and lower class buyers. These homeowners were not always able to make mortgage payments, but were able to get mortgages because of the loose credit regulations. This weak base and rickety frame were too flimsy to maintain the housing market. As the homes were foreclosed, pieces of the real estate market broke away and the entire market eventually
The broken mirror is able to be replaced because there is more than one mirror in the world. The number of mirrors in the world can be counted, just like money. Lenders and borrowers learned money is finite in quantity. Borrowers took on mortgages, but were unable to make the payments. When their homes went into foreclosure, borrowers had less money to spend on anything, including …show more content…
At first glance, this appears to be a wonderful investment, but how can we be sure the housing market will not crash once again? To answer this question, let’s break down the housing market of 2007 (the year of the crash) into all the different components.
The stock market crash of 2000 caused a shift in wealth to the housing market; as a result, the base of the housing market was built on “cheap” mortgages that finance institutions were able to issue. The frame was mostly made up of the middle and lower class buyers. These homeowners were not always able to make mortgage payments, but were able to get mortgages because of the loose credit regulations. This weak base and rickety frame were too flimsy to maintain the housing market. As the homes were foreclosed, pieces of the real estate market broke away and the entire market eventually