Timeline of The United States Housing Bubble - 2007

2007

Year-to-year decreases in both U.S. home sales and home prices accelerates rather than slowing, with U.S. Treasury secretary Paulson calling "the housing decline ... the most significant risk to our economy." Home sales continue to fall. The decrease in existing-home sales is the steepest since 1989. In Q1/2007, S&P/Case-Shiller house price index records first year-over-year decline in nationwide house prices since 1991. The subprime mortgage industry collapses, foreclosure activity increases and rising interest rates threaten to depress prices further as problems in the subprime markets spread to the near-prime and prime mortgage markets.

• February–ongoing: 2007 Subprime mortgage financial crisis Subprime industry collapse; more than 25 subprime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale.
• April 2: New Century Financial, largest U.S. subprime lender, files for chapter 11 bankruptcy.
• July 19: Dow Jones Industrial Average closes above 14,000 for the first time in its history.
• August: worldwide "credit crunch" as subprime mortgage backed securities are discovered in portfolios of banks and hedge funds around the world, from BNP Paribas to Bank of China. Many lenders stop offering home equity loans and "stated income" loans. Federal Reserve injects about $100B into the money supply for banks to borrow at a low rate.
• August 6: American Home Mortgage files for chapter 11 bankruptcy.
• August 7: Democratic presidential front-runner Hillary Clinton proposes a $1 billion bailout fund to help homeowners at risk for foreclosure.
• August 16: Countrywide Financial Corporation, the biggest U.S. mortgage lender, narrowly avoids bankruptcy by taking out an emergency loan of $11 billion from a group of banks.
• August 17: Federal Reserve lowers the discount rate by 50 basis points to 5.75% from 6.25%.
• August 31: President Bush announces a limited bailout of U.S. homeowners unable to pay the rising costs of their debts. Ameriquest, once the largest subprime lender in the U.S., goes out of business.
• September 1–3: Fed Economic Symposium in Jackson Hole, WY addressed the housing recession that jeopardizes U.S. growth. Several critics argued that the Fed should use regulation and interest rates to prevent asset-price bubbles, blamed former Fed-chairman Alan Greenspan's low interest rate policies for stoking the U.S. housing boom and subsequent bust, and Yale University economist Robert Shiller warned of possible home price declines of 50 percent.
• September 14: A run on the bank forms at the United Kingdom's Northern Rock bank precipitated by liquidity problems related to the subprime crisis.
• September 17: Former Fed Chairman Alan Greenspan said "we had a bubble in housing" and warns of "large double digit declines" in home values "larger than most people expect."
• September 18: The Fed lowers interest rates by half a percent (50 basis points) to 4.75% in an attempt to limit damage to the economy from the housing and credit crises.
• September 28: Television finance personality Jim Cramer warns Americans on The Today Show, "don't you dare buy a home—you'll lose money," causing a furor among Realtors.
• September 30: Affected by the spiraling mortgage and credit crises, Internet banking pioneer NetBank goes bankrupt NetBank Inc was the largest savings and loan failure since the tail end of the Savings and Loan crisis in the early 1990s. and the Swiss bank UBS announced that it lost US$690 million in the third quarter.
• September 30:Prices fell 4.9 percent from September 2006 in 20 large metropolitan areas, according to Standard & Poor's/Case-Shiller indexes. This is the 9th straight month prices have fallen.
• October 10: US Government and private industry created Hope Now Alliance to help some sub-prime borrowers.
• October 15–17: A consortium of U.S. banks backed by the U.S. government announced a "superfund" or "super-SIV" of $100 billion to purchase mortgage-backed securities whose mark-to-market value plummeted in the subprime collapse. Fed chairman Ben Bernanke expressed alarm about the dangers posed by the bursting housing bubble; Treasury Secretary Hank Paulson said "the housing decline is still unfolding and I view it as the most significant risk to our economy. ... The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."
• October 31: Federal Reserve lowers the federal funds rate by 25 basis points to 4.5 percent and the discount window rate by 25 basis points to 5 percent.
• October 31: Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor's/Case-Shiller indexes. This is the 10th straight month prices have fallen.
• November 1: Federal Reserve injects $41B into the money supply for banks to borrow at a low rate. The largest single expansion by the Fed since $50.35B on September 19, 2001.
• December 6: President Bush announced a plan to voluntarily freeze the mortgages of a limited number of mortgage debtors holding ARMs for 5 years. The plan run by the Hope Now Alliance. Its phone number is 1-888-995-HOPE. Some experts criticized the plan as "a Band-Aid when the patient needs major surgery", a "teaser-freezer", and a "bail-out".
• December 11: Federal Reserve lowers the federal funds rate by 25 basis points to 4.25 percent and the discount window rate by 25 basis points to 4.75 percent.
• December 12: Federal Reserve injects $40B into the money supply for banks to borrow at a low rate and coordinates such efforts with central banks from Canada, United Kingdom, Switzerland and European Union.
• December 24: A consortium of banks officially abandons the U.S. government-supported "super-SIV" mortgage crisis bail-out plan announced in mid-October, citing a lack of demand for the risky mortgage products on which the plan was based, and widespread criticism that the fund was a flawed idea that would have been difficult to execute.
• December 26: Standard & Poor's/Case-Shiller indexes of housing prices in 20 large metropolitan areas for October 2007 is released showing that for the 10th straight month priced have fallen, but most worrying is that the decline in home prices accelerated and spread to more regions of the country in October. "Since their peak in July 2006, home prices in the 20 regions have dropped 6.6 percent. Economists' predictions of the total amount of home price declines from the bubble's peak range from moderate 10–15 percent to larger 30–50 percent price declines in some areas.
• December 28: The November U.S. Commerce Department's "stunningly weak report" released on December 28, 2007 show that year to year decreases in both U.S. home sales and home prices is accelerating rather than bottoming out due to "eminently rational behaviour" based on "a psychological point where expectations of future price declines have become entrenched".
• Year-end: A total of 2,203,295 foreclosures were filed on 1,285,873 properties during the year, up 75 percent from 2006. More than 1 percent of all households were in some stage of foreclosure during 2007, up from 0.58 percent in 2006.