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:
“There was no speculation so promising, or at the same time so praisworthy, as the United Metropolitan Improved Hot Muffin and Crumpet Baking and Punctual Delivery Company.”
—Charles Dickens (1812–1870)
“Maybe we were the blind mechanics of disaster, but you don’t pin the guilt on the scientists that easily. You might as well pin it on M motherhood.... Every man who ever worked on this thing told you what would happen. The scientists signed petition after petition, but nobody listened. There was a choice. It was build the bombs and use them, or risk that the United States and the Soviet Union and the rest of us would find some way to go on living.”
—John Paxton (1911–1985)
“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)
“While this America settles in the mould of its vulgarity, heavily
thickening to empire,
And protest, only a bubble in the molten mass, pops and sighs out,
and the mass hardens,”
—Robinson Jeffers (1887–1962)