Timeline of The United States Housing Bubble - 2001 - 2006

2006

• 1997–2005:Mortgage fraud increased by 1,411 percent.
• 2000–2003: Early 2000s recession (exact time varies by country).
• 2001–2005: United States housing bubble (part of the world housing bubble).
• 2001: US Federal Reserve lowers Federal funds rate eleven times, from 6.5% to 1.75%.
• 2002–2003: Mortgage denial rate of 14 percent for conventional home purchase loans, half of 1997.
• 2002: Annual home price appreciation of 10% or more in California, Florida, and most Northeastern states."Annual home-value growth at highest rate since 1980". Retrieved 2008-10-06.
  • June 17:President G.W. Bush sets goal of increasing minority home owners by at least 5.5 million by 2010 through tax credits, subsidies and a Fannie Mae commitment of $440 billion to establish NeighborWorks America with faith-based organizations.
• 2003: Fannie Mae and Freddie Mac buy $81 billion in subprime securities.
  • June: Federal Reserve Chair Alan Greenspan lowers federal reserve’s key interest rate to 1%, the lowest in 45 years.
  • September: Bush administration recommended moving governmental supervision of Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. The changes were blocked by Congress.
  • December: President Bush signs the American Dream Downpayment Act to be implemented under the Department of Housing and Urban Development. The goal was to provide a maximum downpayment assistance grant of either $10,000 or six percent of the purchase price of the home, whichever was greater. In addition, the Bush Administration committed to reforming the homebuying process that would lower closing costs by approximately $700 per loan. It was said it would further stimulate homeownership for all Americans.
• 2003-2007: The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned loan standards (employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability), emphasizing instead lender's ability to securitize and repackage subprime loans.
• 2004:
  • U.S. homeownership rate peaked with an all time high of 69.2 percent.
  • HUD increased Fannie Mae and Freddie Mac affordable-housing goals for next four years, from 50 percent to 56 percent, stating they lagged behind the private market; from 2004 to 2006, they purchased $434 billion in securities backed by subprime loans.
  • October:SEC effectively suspends net capital rule for five firms - Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. Freed from government-imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1.
• 2004–2005: Arizona, California, Florida, Hawaii, and Nevada record price increases in excess of 25% per year.
• 2005: United States housing market correction ("bubble bursting").
  • February: The Office of Thrift Supervision implemented new rules that allowed savings and loans with over $1 billion in assets to meet their CRA obligations without investing in local communities, cutting availability of subprime loans.
  • September: The Federal Deposit Insurance Corporation, Federal Reserve, and the Office of the Comptroller of the Currency allow loosening of Community Reinvestment Act requirements for "small" banks, further cutting subprime loans.
  • Fall: Booming housing market halts abruptly; from the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide dropped off 3.3 percent.
  • Year-end: A total of 846,982 properties were in some stage of foreclosure in 2005.
• 2006: Continued market slowdown. Prices are flat, home sales fall, resulting in inventory buildup. U.S. Home Construction Index is down over 40% as of mid-August 2006 compared to a year earlier. A total of 1,259,118 foreclosures were filed during the year, up 42 percent from 2005.