Monthly Archives: January 2015

Housing Market Update 2015

ForSaleBy almost all accounts the last large down turn in the economy (2007 -2009), commonly referred to today as the Great Recession, was caused by cheap and unlimited amounts of money for people who wanted to buy a house, and excessive borrowing by Wall Street. We won’t spend any time today looking at how Wall Street might have changed over the last 6 years; instead this piece reviews the current condition of the US housing market.

Flash back a moment to 2007 and recall the state of the housing market. The amount of money available to help consumers buy a new home seemed limitless. It was no problem if you didn’t have money for a down payment. You didn’t even have to prove you had an income. The era created the “no document loans” and the “no verification of income loan application”. If you could sign a loan application it seemed you could get a loan. In my former career I can even remember seeing securities that were backed by loans where the “loan to the value” of the houses was 125%. Imagine a borrower with a home worth $100,000 and the lender providing a $125,000 mortgage. The insanity continued until yet another bubble was created, leading to the inevitable burst, and a massive crash in the real estate market.

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