Median cost to purchase a home by U.S. stateMedian cost to purchase a home by U.S. metro areaFig. 1: Robert Shiller's plot of U.S. home prices, population, building costs, and bond yields, from Irrational Exuberance, 2nd ed.[1] Shiller shows that inflation-adjusted U.S. home prices increased 0.4% per year from 1890 to 2004 and 0.7% per year from 1940 to 2004, whereas U.S. census data from 1940 to 2004 shows that the self-assessed value increased 2% per year.
Part of a series on the
Great Recession
Major aspects
Subprime mortgage crisis
2000s energy crisis
2000s United States housing bubble
2000s United States housing market correction
2007–2008 financial crisis
2008–2010 automotive industry crisis
Dodd–Frank Wall Street Reform and Consumer Protection Act
European debt crisis
Causes
Causes of the European debt crisis
Causes of the 2000s United States housing bubble
Credit rating agencies and the subprime crisis
Government policies and the subprime mortgage crisis
Summit meetings
34th G8 summit (July 2008)
G-20 Washington summit (November 2008)
APEC Peru (November 2008)
China–Japan–South Korea trilateral summit (December 2008)
G-20 London Summit (April 2009)
Government response and policy proposals
2008 European Union stimulus plan
2008–2009 Keynesian resurgence
American Recovery and Reinvestment Act of 2009
Banking (Special Provisions) Act 2008
Chinese economic stimulus program
Economic Stimulus Act of 2008
Emergency Economic Stabilization Act of 2008
Federal Reserve responses to the subprime crisis
Government intervention during the subprime mortgage crisis
Green New Deal
Housing and Economic Recovery Act of 2008
National fiscal policy response to the Great Recession
Regulatory responses to the subprime crisis
Subprime mortgage crisis solutions debate
Term Asset-Backed Securities Loan Facility
Troubled Asset Relief Program
Business failures
American International Group
Chrysler
Citigroup
Fannie Mae
Freddie Mac
General Motors
Lehman Brothers
Royal Bank of Scotland Group
UBS
Regions
Africa
Americas
South America
United States
Asia
Europe
Oceania
Timeline
v
t
e
The 2000s United States housing bubble or house price boom or 2000shousing cycle[2] was a sharp run up and subsequent collapse of house asset prices affecting over half of the U.S. states. In many regions a real estate bubble, it was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011.[3] On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history.[4] The credit crisis resulting from the bursting of the housing bubble is an important cause of the Great Recession in the United States.[5]
Increased foreclosure rates in 2006–2007 among U.S. homeowners led to a crisis in August 2008 for the subprime, Alt-A, collateralized debt obligation (CDO), mortgage, credit, hedge fund, and foreign bank markets.[6] In October 2007, Henry Paulson, the U.S. Secretary of the Treasury, called the bursting housing bubble "the most significant risk to our economy".[7]
A bubble had the potential to affect not only on home valuations, but also mortgage markets, home builders, real estate, home supply retail outlets, Wall Street hedge funds held by large institutional investors, and foreign banks, increasing the risk of a nationwide recession.[8][9][10][11] Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President George W. Bush and the Chairman of the Federal Reserve Ben Bernanke to announce a limited bailout of the U.S. housing market for homeowners who were unable to pay their mortgage debts.[12]
In 2008 alone, the United States government allocated over $900 billion (~$1.25 trillion in 2023) to special loans and rescues related to the U.S. housing bubble. This was shared between the public sector and the private sector. Because of the large market share of Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (both of which are government-sponsored enterprises) as well as the Federal Housing Administration, they received a substantial share of government support, even though their mortgages were more conservatively underwritten and actually performed better than those of the private sector.[13]
^Cite error: The named reference IE2 was invoked but never defined (see the help page).
^Chodorow-Reich, Gabriel; Guren, Adam M.; McQuade, Timothy J. (October 2022). "The 2000s Housing Cycle With 2020 Hindsight: A Neo-Kindlebergerian View" (PDF).
^"S&P CoreLogic Case-Shiller Home Price Indices - S&P Dow Jones Indices". standardandpoors.com. Archived from the original on May 22, 2013. Retrieved October 5, 2017.
^Mantell, Ruth. "Home prices off record 18% in past year, Case-Schiller says". marketwatch.com. Retrieved April 29, 2009.
^Holt, Jeff. "A Summary of the Primary Causes of the Housing Bubble and the Resulting Credit Crisis: A Non-Technical Paper" (PDF). 2009, 8, 1, 120-129. The Journal of Business Inquiry. Archived from the original (PDF) on October 17, 2014. Retrieved February 15, 2013.
^"In Washington, big business and big money are writing the rules on trade ...". Bill Moyers Journal. June 29, 2007. PBS.
^"Housing woes take bigger toll on economy than expected: Paulson". AFP. October 17, 2007. Archived from the original on September 18, 2010.
^Cite error: The named reference WeekStd bubble trouble was invoked but never defined (see the help page).
^Cite error: The named reference CFC warning was invoked but never defined (see the help page).
^Cite error: The named reference Roubini free fall was invoked but never defined (see the help page).
^Cite error: The named reference RGE tramp stamp was invoked but never defined (see the help page).
^Solomon, Deborah (August 31, 2007). "Bush Moves to Aid Homeowners". The Wall Street Journal.
^Reuters. (2008). FACTBOX – U.S. government bailout tally tops 504 billion pounds.
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