What caused the Housing Market in the Western United States to fall? ?

Question

I am taking a business class and last night we discussed this. But they never answered the above question and I am really curious?

Answer 1

the overall problems with the ecomony that have been a long time coming

Answer 2

it was aggressive lending to under qualified candidates. The housing market took off, and with that, everyone got involved with it, and they created a subclass of lower credit rating, lower income buyers who werent equipped to handle the responsibility of mortgage, and with that, they also had obseen "Arm" rates, that is adjustable rate that locked the buyer in at a lower rate for a short term, then skyrocketed later, when this happened, it raised the already too high mortgage prices these "bad buyers" were paying, so they stopped paying, this created a default on the loan, and banks started losing money, this was all happening across the board, so lenders dried up, and the credit requirements tightened back up. .  

Answer 3

It's a slippery slope. Market fears and current economic realities are making the slope slippery. What started the tumble? What was the push?

SUB-PRIME mortgages. This is what got the ball rolling. Giving loans at rates lower than the market, with the expectation that the market would continue up is a gamble. No problem there. But the financial fund managers started doing this without hedging their exposures (covering their rears). When things didn't work out as expected, as you can imagine, the financial sector's bottom line ended up in the red. When a a few of the larger funds got exposed for fraudulent activity in trying to cover their losses, the dominoes started to crumble.

This of course is a very simplified version of what ha penned. One could spend hours discussing the intricacies of the patter that lead us here today.

Answer 4

Because Congress said give loans to Minorities because it was discrimination, but when you make 40,000 dollars a year and but a house for 500,000 dollars you know something is awry about the lending process, once interests rates Rose a little that caused the default. I blame Banks the people that bought the houses and Congress

Answer 5

Natural consequences of actions and activities.

Sense of entitlement.  People thinking that because they want something they should get it.  People being given loans they didn't qualify for, and couldn't pay as interest rates increased.  People being given multiple loans so they paid $0 down and had no equity in homes.

GREED.  Lenders wanting to sell more loans, packaging them and bundling them.  Underwriting standards being stretched and lowered to allow more to borrow.  As long as housing was booming, this usually worked fine for them.