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Noon Edition

10 Years After The Housing Bubble

The US housing market bubble burst in 2008 (Pixabay)

Noon Edition airs on Fridays at noon on WFIU.

By the mid-2000's, the United States was in the midst of a housing bubble.

Soaring real estate prices finally reached an untenable and unrealistic level, and when the market corrected, millions of Americans lost equity as their assets were suddenly worth less than their mortgage.

As a result, the American economy plunged into a crisis and recession of a level not seen since the Great Depression.

This week on Noon Edition we discuss the housing bubble ten years later.

Guests

Matt Kinghorn, Senior Demographic Analyst with the Indiana Business Research Center

Jacob Sipe, Executive Director of the Indiana Housing & Community Development Authority

Lori Todd, Broker, Owner, and Founder of Choice Realty & Management and member of the Indiana Association of Realtors

Conversation

Matt Kinghorn says that a weakening of mortgage lending standards and overconfidence in the market fed into the housing bubble.

"I think, at its core, the bubble was driven by an abandoning of mortgage lending standards and that lack of standards was met by an irrational exuberance from investors, from builders, from speculators, from home owners, from lots and lots of folks," Kinghorn says. "What that caused was some shifts in the housing market that were in no way tied to any fundamentals."

Lori Todd recounts her experience of being a realtor during the housing bubble and seeing warning signs that the market was unsustainable.

"It was very common to go to a closing table and see buyers getting checks back at closing," Todd says. "They were doing first and second mortgage loans where they had no money invested in the property. As that foreclosure process started to take place, they had nothing invested."

Jacob Sipe says home ownership remains important and a good way for most people to build wealth.

"We shouldn't downplay the importance of being a homeowner, but that doesn't mean that it's for everybody," Sipe says. "What we should be focused on is responsible home ownership and making sure that when you become a homeowner you understand what that means, having gone through housing counseling, making sure you understand your property taxes and maintenance."

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