Timeline of The United States Housing Bubble - 1968 - 1991

1991

• 1968: As part of the Housing and Urban Development Act of 1968, the Government mortgage-related agency, Federal National Mortgage Association (Fannie Mae) is converted from a federal government entity to a stand-alone government sponsored enterprise (GSE) which purchases and securitizes mortgages to facilitate liquidity in the primary mortgage market. The move takes the debt of Fannie Mae off of the books of the government.
• 1970 Federal Home Loan Mortgage Corporation (Freddie Mac) is chartered by an act of Congress, as a GSE, to buy mortgages on the secondary market, pool them, and sell them as mortgage-backed securities to investors on the open market. The average cost of a new home in 1970 is $26,600 ($140,582 in 2007 dollars). From 1960 to 1970, inflation rose from 1.4% to 6.5% (a 5.1% increase), while the consumer price index (CPI) rose from about 85 points in 1960 to about 120 points in 1970, but the median price of a house nearly doubled from $16,500 in 1960 to $26,600 in 1970.

• 1974: Equal Credit Opportunity Act imposes heavy sanctions for financial institutions found guilty of discrimination on the basis of race, color, religion, national origin, sex, marital status, or age.
• 1977: Community Reinvestment Act passed to encourage banks and savings and loan associations to offer credit to minority groups on lower incomes or owning small businesses 12 U.S.C. § 2901 et seq.). Beforehand, the companies had been engaging in a practice known as redlining.
• July, 1978: Section 121 allowed for a $100,000 one-time exclusion in capital gain for sellers 55 years or older at the time of sale.
• 1980: The Depository Institutions Deregulation and Monetary Control Act of 1980 granted all thrifts, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts, but with little regulatory oversight of competing banks; also exempted federally chartered savings banks, installment plan sellers and chartered loan companies from state usury limits. The cost of a new home in 1980 is $76,400 ($189,918 in 2007 dollars).
• 1981: The Section 121 exclusion, allowing for a one-time exclusion in capital gain for sellers 55 years or older at the time of sale, was increased from $100,000 to $125,000.
• 1981: Each Federal Reserve bank establishes a Community Affairs Office to ensure compliance with Community Reinvestment Act.
• 1985–1991: Savings and Loan Crisis caused by rising interest rates and over development in the commercial real estate sector, and exacerbated by deregulation of savings and loan lending standards and a reduction in capital reserve requirements from 5% to 3%.
• 1986: The Tax Reform Act of 1986 eliminated the tax deduction for interest paid on credit cards, encouraging the use of home equity through refinancing, second mortgages and home equity lines of credit (HELOC) by consumers.
• 1986–1991: New homes constructed dropped from 1.8 to 1 million, the lowest rated since World War II.
• 1989: One-month drop in sales of previously owned homes of 12.6 percent.; Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) enacted which established the Resolution Trust Corporation (RTC), closing hundreds of insolvent thrifts and moved regulatory authority to the Office of Thrift Supervision (OTS); required federal agencies to issue Community Reinvestment Act ratings publicly.
• 1990: The average cost of a new home in 1990 is $149,800 ($234,841 in 2007 dollars).
• 1991–1997: Flat Housing prices.
• 1991: US recession, new construction prices fall, but above inflationary growth allows them to return by 1997 in real terms.