The Path to Disaster: Recounting the Real Estate Market Meltdown
By Matt Carter, Janis Mara, Samantha Peterson, Glenn Roberts Jr., Susan Romero
Boom gave way to gloom and doom in the housing and financial markets, and analysts are already retracing the steps that led us here in an effort to understand what went wrong and why.
There are those who saw this disaster coming all along, those who had predicted it would happen years earlier, and still others who professed that the latest downturn would be mild, a “soft landing” for the housing market — few accurately predicted the scope of the housing slump and the severity of the economic consequences and collateral damage.
The finger-pointing and mud-slinging blame game accompanying this housing slump, credit crunch and global economic crisis is perhaps especially intense because of the approaching presidential election.
Many will ultimately share the blame, from the homeowners who banked on continuing appreciation — and lost — to the high-flying Wall Street brainiacs who packaged and resold mortgage debt using complex financial instruments.
We dug back in the Inman News archives for some forensic evidence that foretold the catastrophic demise of the boom days, for those clues — some subtle and some now painfully obvious — that this was all bound to happen.
The 10 articles presented here — originally published from 2003 to 2007 — offer discussions of ominous housing-bubble theories, the rise and the risks of subprime lending and unconventional mortgage products, skyrocketing home prices, overbuilding, the potential for a widespread credit crisis, and other contributors to the problems facing the housing and financial markets.
The lessons learned from the latest extreme run-up and burnout phases in the housing market will perhaps guide the industry and its regulators in efforts to reduce the fallout from future cycles.
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