The U.S. housing bubble burst was a famous economic event that affected more than half of the states in the country during the beginning of the 2000s. It was characterized by housing prices being considerably changed in several years: an evident peak in 2006, a sudden decline in 2007, and a financial crisis in 2008 (Sauter). The goal of this paper is to identify the main causes and outcomes of the bubble creation between 2006 and 2008 and its possible development in today’s United States.
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At the beginning of the 2000s, many Americans found it necessary to buy a house despite the existing risks of loans in order to make profits in the future. They believed that values’ increase could be observed due to the existing mortgage-backed securities and adjusted-rate mortgages (Sullivan). The example of one state encouraged the citizens of other states to buy houses in the middle of the country without thinking of how the real-estate market could perform (Bauman). As a result, the construction market became developing, people saw new opportunities, and banks began losing control over credit propositions. New price escalation was observed because people could not evaluate the supply-demand situation, and speculators introduced their services. However, in a short period of time, the demand for houses dramatically decreased, whilst the supply was at its peak. Therefore, it was necessary to low prices, which led to the creation of the bubble burst. The US economy was challenged, and people lost their money without any evident reasons.
In 2008, the housing bubble burst, provoking the development of a new financial crisis in the United States. Although some people thought that this problem could be prevented and controlled, almost similar conditions are observed today. Housing prices remain unstable, and citizens are not sure if their decisions to buy or not to buy a property could be justified. The history of the past bubble challenged many people and organizations, and it is necessary to do everything possible to avoid a price recession in the future.
Bauman, Valerie. “Revealed: The States That Are Winning – And Losing – The American Real Estate Game, a Decade after the U.S. Housing Bubble Burst.” DailyMail. 2018, Web.
Sauter, Michael B. “These Are the 16 Faster Shrinking Housing Markets across the US.” USA Today. 2019. Web.
Sullivan, Adam. “Housing Bubble Was Predictable and Preventable, Iowa City Filmmaker Explains.” The Gazette. 2019, Web.