Why the U.S. Real Estate Crisis Is Happening
Posted on May 25, 2008
Filed Under Mortgage Updates
Most of us know that the real estate business has taken a turn for the worst in the U.S., with a high rise in foreclosures, home closures and the inability to buy and sell. In fact, the year 2007 was said to have real estate drop in sales by an average of 8.9%, an all time high, with some metro areas going up to 18% in drops. This is higher than it’s been in over 20 years and it has officially moved us into a depression.
There is actually a reason behind the sky rocketing problems with foreclosures…it isn’t coming out of the blue. The real estate problem is one that started to move into a crash beginning in 2001. During this time, the concept of the New Economy ended. This is one that was based around corporations, centralized banks and systems that were all located in one vicinity. When this ended, it caused for a loss in money because of the change in system.
Leave it to the US Federal Reserve. They didn’t want anyone to know about the change, because it would have led into a depression then. So, instead, they printed more money… a lot of more money. And, most of it was just a piece of paper. They then used this in order to build credit and loans. While this was done, the credit and the loans were given to those who had lower sets of income, because they could afford the credits and loans.
So, now, seven years later, there is a crisis. All of the credit and loans that individuals got, who typically wouldn’t be able to afford it, started moving up in rates. Interest rates, extra expenses, and all of the ‘terms and conditions’ weren’t built to help people get homes. They were built to give the federal reserve money back for what they lent out from money that was being printed out of term.
So, what is actually happening is that the money boost that you thought was happening was false. Unfortunately, those who thought they would be able to afford better living are now suffering, once again, leaving a large amount of vacancies and an entirely depressed economy.
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