Causes Of The United States Housing Bubble
| Equivalent price-to-earnings (P/E) ratio for homes. To compute the P/E ratio for the case of a rented house, divide the price of the house by its potential yearly earnings or net income, which is the market rent of the house minus expenses, which include property taxes, maintenance and fees. This formula is: For the example of the $250,000 home considered above, the P/E ratio would be 24 if this home rents for $1250 per month. Fortune magazine cites a historic range of 11 or 12 for the simpler price-to-rent ratio. |
Observers and analysts have attributed blame for the 2001-2006 housing bubble and its 2007-10 collapse in the United States to "everyone from home buyers to Wall Street, mortgage brokers to Alan Greenspan". Other culprits accused of blame include "Mortgage underwriters, investment banks, rating agencies, and investors", "low mortgage interest rates, low short-term interest rates, relaxed standards for mortgage loans, and irrational exuberance" Politicians in both the Democratic and Republican political parties have been blamed for "pushing to keep derivatives unregulated" and "with rare exceptions" giving Fannie Mae and Freddie Mac "unwavering support".
Read more about Causes Of The United States Housing Bubble: 'Mania' For Home Ownership, Risky Mortgage Products and Lax Lending Standards, See Also
Famous quotes containing the words united, states, housing and/or bubble:
“The men the American people admire most extravagantly are the most daring liars; the men they detest most violently are those who try to tell them the truth. A Galileo could no more be elected President of the United States than he could be elected Pope of Rome. Both posts are reserved for men favored by God with an extraordinary genius for swathing the bitter facts of life in bandages of soft illusion.”
—H.L. (Henry Lewis)
“Our citizenship in the United States is our national character. Our citizenship in any particular state is only our local distinction. By the latter we are known at home, by the former to the world. Our great title is AMERICANS—our inferior one varies with the place.”
—Thomas Paine (1737–1809)
“We have been weakened in our resistance to the professional anti-Communists because we know in our hearts that our so-called democracy has excluded millions of citizens from a normal life and the normal American privileges of health, housing and education.”
—Agnes E. Meyer (1887–1970)
“Each swung in danger on its slender twig,
A bubble on a pipestem, growing big.”
—Robert Frost (1874–1963)