Timeline of the United States housing bubble

Timeline of the United States housing bubble

The United States housing bubble is over. Housing prices peaked in early 2005, began declining in 2006 and may not yet have hit bottom.

Timeline 1985–2008

*1985–1991: Savings and Loan crisis
**January 1989: One-month drop in sales of previously owned homes of 12.6 percent.cite news |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/04/24/AR2007042400627.html |title=Existing-Home Sales Fall Steeply |author=Nancy Trejos |work=The Washington Post |date=2007-04-24 |accessdate=2008-03-17 ]
**1986–1991: New homes constructed dropped from 1.8 to 1 million, the lowest rated since World War II. [cite web |title=Housing Finance in Developed Countries An International Comparison of Efficiency, United States |url=http://www.fanniemaefoundation.org/programs/jhr/pdf/jhr_0301_ch6_USA.pdf |year=1992 |publisher=Fannie Mae ]
*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.
**1995: Fannie Mae and Freddie Mac began receiving affordable housing credit for for buying subprime securities. [cite news|url=http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html| title=How HUD Mortgage Policy Fed The Crisis|first=Carol D. |last=Leonnig|date= June 10, 2008|publisher=Washington Post]
**1997: Mortgage denial rate of 29 percent for conventional home purchase loanscite press release |title=(untitled) |date=2004-07-26 |publisher=Federal Financial Institutions Examination Council |accessdate=2008-03-18 |url=http://www.ffiec.gov/hmcrpr/hm072604.htm ]
**September 23, 1998: New York Fed brings together consortium of investors to bail out Long-Term Capital Management
**1998: Inflation-adjusted home price appreciation exceeds 10%/year in most West Coast metropolitan areas [cite web |url=http://www.kansascityfed.org/publicat/sympos/2007/PDF/2007.08.01.Shiller.pdf |title=Understanding Recent Trends in House Prices and Home Ownership |author=Robert J. Shiller ]
**1999: Gramm-Leach-Bliley Act, repealed the Glass-Steagall Act of 1933, allowed commercial and investment banks to consolidate.
**1995–2001: Dot-com bubble
***March 10, 2000: Dot-com bubble collapse NASDAQ Composite index peaked
*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 11 times, from 6.5% to 1.75%.cite web |url=http://www.federalreserve.gov/fomc/fundsrate.htm |title=Intended federal funds rate, Change and level, 1990 to present ]
**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.cite web |title=Annual home-value growth at highest rate since 1980 |url=http://www.allbusiness.com/finance/3595974-1.html |accessdate=2008-10-06
**2004: U.S. homeownership rate peaked with an all time high of 69.2 percent.cite news |title=Census Bureau Reports on Residential Vacancies and Homeownership |date=2007-10-26 |publisher=U.S. Census Bureau |format=PDF |url=http://www.census.gov/hhes/www/housing/hvs/qtr307/q307press.pdf ]
**1997–2005:Mortgage fraud increased by 1,411 percent [cite web |title=Mortgage Loan Fraud: An Industry Assessment based upon Suspicious Activity Report Analysis |date=November 2006 |url=http://www.fincen.gov/MortgageLoanFraud.pdf |format=PDF |publisher=Financial Crimes Enforcement Network, U.S. Department of the Treasury |accessdate=2008-03-17 ]
**2004–2005: Arizona, California, Florida, Hawaii, and Nevada record price increases in excess of 25% per year.Fact|date=February 2008
*2005–ongoing: United States housing market correction ("bubble bursting")
**2005: Boom ended August 2005. The booming housing market halted abruptly for many parts of the U.S. in late summer of 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.
**2007: Year-to-year decreases in both U.S. home sales and home prices accelerates rather than bottoming out, with U.S. Treasury secretary Paulson calling the "the housing decline ... the most significant risk to our economy."

Timeline 2007

*2007: Home sales continue to fall. The plunge 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. [cite web |url=http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html |title=S&P/Case-Shiller house price index ] The subprime mortgage industry collapses, and a surge of foreclosure activity (twice as bad as 2006 [http://www.huffingtonpost.com/hale-stewart/housing-problems-start-to_b_53510.html Huffington Post] quotes [http://www2.fdic.gov/qbp/2007mar/qbp.pdf the FDIC's Quarterly Banking Profile] : “The next sign of mortgage related financial problems came out in the FDIC's Quarterly Banking Profile. The report noted on page 1, "Reflecting an erosion in asset quality, provisions for loan losses totaled $9.2 billion in the first quarter [of 2007] , an increase of$3.2 billion (54.6%) from a year earlier." The reason for the loan-loss provision increases was an across the board increase in delinquencies and charge offs which increased 48.4% from year ago levels. The report noted on page 2 that "Net charge-offs of 1-4 family residential mortgage loans were up by $268 million (93.2%) [from year ago levels] ."” ] ) and rising interest rates threaten to depress prices further as problems in the subprime markets spread to the near-prime and prime mortgage markets. cite news |title=Lender Sees Mortgage Woes for 'Good' Risks |work=The New York Times |date=2007-07-25 |url=http://www.nytimes.com/2007/07/25/business/25lend.html ]
**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. [http://money.cnn.com/2007/04/02/news/companies/new_century_bankruptcy/ New Century files for Chapter 11 bankruptcy] , selling its assets for $139 million, subject to bankruptcy approval.CNN Money, April 3 2007.]
**July 19: Dow Jones Industrial Average closes above 14,000 for the first time in its history. [ [http://finance.yahoo.com/q/hp?s=%5EDJI Dow-Jones historical prices] ]
**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. [ [http://www.reuters.com/article/marketsNews/idUKWEN037120070810?rpc=44 Accredited Home sees up to $60 mln loss for quarter | Markets | Markets News | Reuters ] ]
**August 7: Democratic presidential front-runner Hillary Clinton proposes a $1 billion bailout fund to help homeowners at risk for foreclosure. [cite news |url=http://news.yahoo.com/s/nm/20070807/pl_nm/usa_politics_clinton_dc_1 |title=Clinton proposes crackdown in mortgage market |date=2007-08-07 ]
**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. [cite news |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=ax4Hih1unXTs |title=Countrywide Taps $11.5 Billion Credit Line From Banks |date=2007-08-16 |work=Bloomberg ]
**August 17: Federal Reserve lowers the discount rate by 50 basis points to 5.75% from 6.25%. [cite news| url=http://biz.yahoo.com/ap/070817/fed_interest_rates.html?.v=38| title=Fed Approves Cut in Loan Discount Rate| first=Martin| last=Crutsinger| publisher=AP|date=Aug 17, 2007]
**August 31: President Bush announces a limited bailout of U.S. homeowners unable to pay the rising costs of their debts. cite news |title=Bush Moves to Aid Homeowners |work=The Wall Street Journal |date=2007-08-31 |url=http://online.wsj.com/article/SB118851742988914064.html?mod=googlenews_wsj ] Ameriquest, once the largest subprime lender in the U.S., goes out of business;cite news |title=Ameriquest closes, Citigroup buys mortgage assets |date=2007-08-31 |work=The Washington Post |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/08/31/AR2007083101702.html ]
**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,cite news |title=Fed, Blamed for Asset-Price Inaction, Is Told 'Tide Is Turning' |date=2007-09-04 |work=Bloomberg |url=http://www.bloomberg.com/apps/news?pid=20601109&sid=aLsu9feQITDY&refer=news ] blamed former Fed-chairman Alan Greenspan's low interest rate policies for stoking the U.S. housing boom and subsequent bust,cite news |title=Ultra-low Fed rates stoked US housing boom—Taylor |date=2007-09-04 | work=Reuters |url=http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-09-01T193138Z_01_N01303543_RTRIDST_0_USA-ECONOMY-TAYLOR-UPDATE-1.XML ] cite news |title=Fed Gets 'F' for Failures on Housing,Leamer Says |date=2007-08-31 |work=Bloomberg |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=asQ4NoH14X3E&refer=home ] and Yale University economist Robert Shiller warned of possible home price declines of 50 percent.cite news |publisher=Finfacts Ireland |title=Two top US economists present scary scenarios for US economy; House prices in some areas may fall as much as 50% - Housing contraction threatens a broader recession |date=2007-09-03 |url=http://www.finfacts.com/irelandbusinessnews/publish/article_1011005.shtml |quote=The examples we have of past cycles indicate that major declines in real home prices—even 50 percent declines in some places—are entirely possible going forward from today or from the not too distant future. ]
**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.cite news |title=Northern Rock asks for Bank help |date=2007-09-13 |work=BBC News | url=http://news.bbc.co.uk/1/hi/business/6994099.stm ]
**September 17: Former Fed Chairman Alan Greenspan said "we had a bubble in housing" cite news
title=Alan Greenspan Interview with Jim Lehrer |date=2007-09-18 |work=The NewsHour with Jim Lehrer |url=http://youtube.com/watch?v=yU4WjhijOMY
] cite news |title=Greenspan alert on US house prices |date=2007-09-17 |work=Financial Times |url=http://www.ft.com/cms/s/0/31207860-647f-11dc-90ea-0000779fd2ac.html ] 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. [cite news |title=Fed Cuts Key Interest Rates by a Half Point |date=2007-09-18 |work=The New York Times |url=http://www.nytimes.com/2007/09/18/business/18cnd-fed.html ]
**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.cite news |title=Jim Cramer vs NAR President |date=2007-09-28 |work=The Today Show |url=http://www.youtube.com/watch?v=N_WuwoDYPdQ ]
**September 30: Affected by the spiraling mortgage and credit crises, Internet banking pioneer NetBank goes bankruptcite news |title=NetBank Files for Bankruptcy After Regulators Take Over Unit |date=2007-09-30 |work=Bloomberg |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=ajOPHuXaoV3c&refer=home ] NetBank Inc was the largest savings and loan failure since the tail end of the Savings and Loan crisis in the early 1990s. [cite news |url=http://www.msnbc.msn.com/id/21039715 |title=Government shuts down NetBank |date=2007-09-28 |accessdate=2008-03-17 |work=MSNBC |publisher=Associated Press] and the Swiss bank UBS announced that it lost US$690 million in the third quarter.cite news |title=UBS forecasts pretax loss up to $690 million in 3Q |date=2007-09-30 |work=International Herald Tribune |url=http://www.iht.com/articles/ap/2007/10/01/business/EU-FIN-COM-Switzerland-UBS-Loss.php]
**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.cite news |url=http://www.nytimes.com/2007/12/26/business/27home-web.html |work=The New York Times |title=Home Prices Fall for 10th Straight Month |date=2007-12-26 ]
**October 10: US Government and private industry created Hope Now Alliance to help some sub-prime borrowers. [cite press release |publisher=Hope Now Alliance |title=HOPE NOW Alliance Created to Help Distressed Homeowners |date=2007-10-10 |accessdate=2008-03-17 |format=PDF |url=http://www.fsround.org/media/pdfs/AllianceRelease.pdf ]
**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.cite news |title='Super fund' helps ease markets |date=2007-10-15 | work=Financial Times |url=http://www.ft.com/cms/s/0/26ddbb82-7b55-11dc-8c53-0000779fd2ac.html ] Fed chairman Ben Bernanke expressed alarm about the dangers posed by the bursting housing bubble;Fact|date=January 2008 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."cite news |title=Housing woes take bigger toll oneconomy than expected: Paulson |date=2007-10-17 |work=AFP |url=http://afp.google.com/article/ALeqM5hWSjWmGJ4YXTh3PM5kOC7csTT48g ]
**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. [cite press release |url=http://www.whitehouse.gov/news/releases/2007/12/20071206-7.html |title=Fact Sheet: Helping American Families Keep Their Homes |publisher=The White House |date=2006-12-06 ] Some experts criticized the plan as "a Band-Aid when the patient needs major surgery",cite news |title=Putting a freeze to mortgage meltdown |date=2007-12-06 | work=Marketplace |publisher=American Public Media |accessdate=2008-03-17 |url=http://marketplace.publicradio.org/display/web/2007/12/06/foreclosure_q/ ] a "teaser-freezer",cite news |title=Experts see Bush mortgage fix as a bandage: Freezing adjustable rates won't stop manyforeclosures, they say |date=2007-12-06 |work=MSNBC |url=http://www.msnbc.msn.com/id/22068498/ ] and a "bail-out".cite news |title=Those Who Avoided Risk Call Plan A Raw Deal |date=2007-12-06 |work=The Washington Post |url=http://www.washingtonpost.com/wp-dyn/content/article/2007/12/06/AR2007120602572.html ] cite news |title=Bail-out means the liars have won |date=2007-12-06 |work=The Age |url=http://business.theage.com.au/bailout-means-the-liars-have-won/20071207-1fqz.html ]
**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,cite news |date=2007-12-24 |title=Banks abandon plan for Super-SIV |work=Reuters |url=http://uk.reuters.com/article/fundsNews/idUKNOA43186020071224 ] 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". [cite news |url=http://www.forbes.com/markets/feeds/afx/2007/12/28/afx4479613.html |work=Forbes |title=US November new home sales plunge 9 pct to 12-year low |date=2007-12-28 ]

Timeline 2008

*2008: Home sales continue to fall. Fears of a U.S. recession. Global stock market corrections and volatility.
**January 2–21: January 2008 stock market downturn
**January 24: The National Association of Realtors (NAR) announced that 2007 had the largest drop in existing home sales in 25 years, [cite news |date=2008-01-24 |title=Biggest Drop in Existing Home Sales in 25 Years |work=The New York Times |url=http://www.nytimes.com/aponline/business/AP-Economy.html?em&ex=1201323600&en=1b649a5aa248c399&ei=5087%0A ] and "the first price decline in many, many years and possibly going back to the Great Depression." [cite news |date=2008-01-24 |title=Home Prices Fell in '07 for First Time in Decades |work=The New York Times |url=http://www.nytimes.com/2008/01/24/business/24cnd-home.html ]
**March 10: Dow Jones Industrial Average at the lowest level since October 2006, falling more than 20% from its peak just five months prior.
**March 14–18: Dropping valuations of mortgage securities caused by skyrocketing default and foreclosure rates forces margin calls to the Wall Street bank Bear Stearns for debts the bank used to leverage mortgage issuances, and threatens BSC with bankruptcy and causes worldwide market jitters. In a weekend deal brokered by U.S. Treasury secretary Paulson and Fed chairman Ben Bernanke, JPMorgan bank agrees to purchase BSC for $2 per share, compared to their 2007 high of nearly $170, in exchange for the Federal Reserve Bank agreeing to accept BSC's devalued mortgage back securities as collateral for public loans at the newly created Term Securities Lending Facility (TSLF), effectively providing a mechanism to bail out Wall Street banks threatened with insolvency.cite news |date=2008-03-18 |title=JPMorgan’s $12 Billion Bailout |work=The New York Times |url=http://dealbook.blogs.nytimes.com/2008/03/18/jpmorgans-12-billion-bailout/ ]
**March 1–June 18: 406 people were arrested for mortgage fraud in an FBI sting across the U.S., including buyers, sellers and others across the wide-ranging mortgage industry.cite news | title=FBI Cracks Down On Mortgage Fraud | date=2008-06-19 | publisher = CBS news | url=http://www.cbsnews.com/stories/2008/06/19/national/main4194649.shtml]
**June 18: As the chairman of the Senate Banking Committee Connecticut's Christopher Dodd proposed a housing bailout to the Senate floor that would assist troubled subprime mortgage lenders such as Countrywide Bank, Dodd admitted that he received special treatment, perks, and campaign donations from Countrywide, who regarded Dodd as a "special" customer and a "Friend of Angelo." Dodd received a $75,000 reduction in mortgage payments from Countrywide.cite news |date=2008-06-12 |title=Countrywide's Many 'Friends' |work=Conde Nast Portfolio |url=http://www.portfolio.com/news-markets/top-5/2008/06/12/Countrywide-Loan-Scandal ] cite news |date=2008-06-19 |title=Angelo's Angel |work=Wall Street Journal |url=http://online.wsj.com/article/SB121383295591086669.html?mod=googlenews_wsj ] The Chairman of the Senate Finance Committee Kent Conrad and the head of head of Fannie Mae Jim Johnson also received mortgages on favorable terms due to their association with Countrywide CEO Angelo R. Mozilo.cite news |title=Countrywide Friends Got Good Loans |date=7 June 2008 |work=Wall Street Journal | url=http://online.wsj.com/article/SB121279970984353933.html?loc=interstitialskip ]
**June 19: Ex-Bear Stearns fund managers were arrested by the FBI for their allegedly fraudulent role in the subprime mortgage collapse. The managers purportedly misrepresented the fiscal health of their funds to investors publicly while privately withdrawing their own money. [cite news |date=2008-06-19 |title=Ex-Bear Stearns Fund Managers Arrested by FBI Agents |work=Bloomberg |url=http://www.bloomberg.com/apps/news?pid=20601087&sid=aHZnRy9Si0OI&refer=home ]

ee also

*Subprime crisis impact timeline for the post-bubble timeline
*Financial crisis of 2007–2008 for the liquidity crisis as a whole
*Global financial crisis of September–October 2008 for the resulting global sharp reductions in the value of equities (stock), financial instruments, and commodities worldwide.

References and notes

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