Steve C Visnovske
This paper aims to examine some of the apparent major causes of the downfall to the real estate industry and addresses measures that have been taken to help prevent a further decline in the market. Some of the major items that will be discussed include; how the bubble popped, the creation of Fannie Mae and Freddie Mac, mortgage-backed-securities/credit-default-swaps and their role in over leveraging investor assets, the dramatic inflation in property values and the appraiser’s role in over-valuing, the emergence of the sub-prime mortgage industry, second-home and investment properties, the consumers and private sectors role now and steps the government has made to help rejuvenate the industry. The majority of findings were pulled from peer-reviewed articles written within the last year.
The decline of the real estate market has affected millions of Americans over the last 10 years and there doesn’t seem to be an end in sight. Regardless of what caused the bubble to pop or what the government has attempted to do to help revitalize the industry, many lessons can be learned from how we as businesses, employees and consumers acted and re-acted during the last decade. Second home, speculative investing, dramatic inflation in home prices, sub-prime mortgages and mortgaged-backed securities can all be pointed to as reasons why Americans are now left in this position. Consumer confidence, lending availability and private sector job growth will be the key to our recovery.
How the Bubble Popped
The housing bubble can be defined as a situation in which housing prices are above what was justified by fundamental factors such as income. In a snapshot, as noted by Iwan J Azis in his 2010 article “Predicting a recovery date from the economic crisis of 2008, chaos broke out when homeowners began to have difficulties with payments, others struggled to get loans to refinance and... [continues]
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(2010, 10). Avoiding Another Real Estate Bubble. StudyMode.com. Retrieved 10, 2010, from http://www.studymode.com/essays/Avoiding-Another-Real-Estate-Bubble-430553.html
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"Avoiding Another Real Estate Bubble." StudyMode.com. 10, 2010. Accessed 10, 2010. http://www.studymode.com/essays/Avoiding-Another-Real-Estate-Bubble-430553.html.