Housing Bubble Research Paper
The Housing Bubble: America’s Downfall
Linda Smith
Professor Bolden
Abstract
A housing bubble is a situation where there is an extremely high demand for housing, but this demand is created through artificial ways, like lowering interest rates. The interest rates are lowered to create a false sense of security for consumers and can lead to economic boom. Also, as we are learning the hard way in the United States, it can end in economic hardships.
Most Americans would tend to agree that the housing bubble has affected all of us in some way or another. Whether we lost a house, a job, or a business it affect us. The housing bubble gave most Americans a false sense of security to spend money that they really didn’t have. Americans that …show more content…
(Cornett, B. 2007)
On the down side of subprime lending:
While the basic developments in the subprime mortgage market seem positive, the relatively high delinquency rates in the subprime market do raise issues. ... For mortgage lenders the real challenge is to figure out how far to go. ... If lenders do make new loans, can conditions be designed to prevent new delinquencies and foreclosures?" (Cornett, B., 2007)
On the up side of subprime lending:
The obvious advantage of the expansion of subprime mortgage credit is the rise in credit opportunities and homeownership. Because of innovations in the prime and subprime mortgage market, nearly 9 million new homeowners are now able to live in their own homes, improve their neighborhoods, and use their homes to build wealth."(Cornett, B., …show more content…
Is making money off of borrowers who really can’t afford a house and charging them higher interest rates to borrow the money a well designed plan?” It seems as if these subprime borrowers were used to boost the economy at one point but when the housing bubble burst who helped them keep their homes and their American dream?
“Between 2000 and 2006, the number of home foreclosures continued to rise in America. A barrage of studies and data analysis suggested a strong connection between the rise in foreclosures and the subprime mortgage lending market.” (Cornett, B.,
Linda Smith
Professor Bolden
Abstract
A housing bubble is a situation where there is an extremely high demand for housing, but this demand is created through artificial ways, like lowering interest rates. The interest rates are lowered to create a false sense of security for consumers and can lead to economic boom. Also, as we are learning the hard way in the United States, it can end in economic hardships.
Most Americans would tend to agree that the housing bubble has affected all of us in some way or another. Whether we lost a house, a job, or a business it affect us. The housing bubble gave most Americans a false sense of security to spend money that they really didn’t have. Americans that …show more content…
(Cornett, B. 2007)
On the down side of subprime lending:
While the basic developments in the subprime mortgage market seem positive, the relatively high delinquency rates in the subprime market do raise issues. ... For mortgage lenders the real challenge is to figure out how far to go. ... If lenders do make new loans, can conditions be designed to prevent new delinquencies and foreclosures?" (Cornett, B., 2007)
On the up side of subprime lending:
The obvious advantage of the expansion of subprime mortgage credit is the rise in credit opportunities and homeownership. Because of innovations in the prime and subprime mortgage market, nearly 9 million new homeowners are now able to live in their own homes, improve their neighborhoods, and use their homes to build wealth."(Cornett, B., …show more content…
Is making money off of borrowers who really can’t afford a house and charging them higher interest rates to borrow the money a well designed plan?” It seems as if these subprime borrowers were used to boost the economy at one point but when the housing bubble burst who helped them keep their homes and their American dream?
“Between 2000 and 2006, the number of home foreclosures continued to rise in America. A barrage of studies and data analysis suggested a strong connection between the rise in foreclosures and the subprime mortgage lending market.” (Cornett, B.,