Hindsight Shows The Real Cause Of The Housing Market Crash

Posted by Joe Manausa on Monday, October 18th, 2010 at 12:09pm.

The real cause of the housing market crash is not pleasant to accept, but consumer greed drove a fury of activity that has lead to us being paralyzed with inventory

Cause Of The Housing Market CrashThe housing market crash is not yet behind us, rather it is still ongoing or possibly ahead of us.

We know that we are currently creating a new market bottom, as the number of home buyers continues to decline during the post tax-credit stimulus. It is a good thing that we monitor the market so closely, as a whole new rash of people are coming forward looking for the group(s) to blame. Recently, long time reader "MD" wrote:

Joe, I have read that loose lending practices was the primary cause of the real estate market crash, but when I read your reports that focus on supply and demand, it makes me think that builders had a major hand in this as well since we have way too many homes for the market to handle right now. What are your thoughts on the housing market crash? MD

The Butler Did It (Caused The Housing Market Crash)!

In a country where self accountability is all but gone, this might not be a well received conclusion.

As in all markets gone awry, the consumer ultimately shares the blame with all the other parties, for motivating the market to continue on its path.

  • REALTORS encouraged people to buy (and sell)
  • Builders built more homes than were needed
  • Lenders created poorly designed loan products to fill demand
  • Borrowers took risky loans to get "more house"
  • Sellers sold at crazy prices

But at the end of the day, here we are. There has been a housing market crash and we have too many homes that need to be consumed. Why "consumed?"

Because this is not a market that investors can bail us out from. Ultimately, somebody needs to move into each and every home (this is how houses are consumed).

It is not enough to "rent out a home." If the tenant comes from out of town, then we can say this home has been consumed. But if the tenant was owning or renting already in Tallahassee, this is just a shift and has no bearing on consumption.

End Of Housing Market Crash

For the housing market crash to end, we must see a growth in home consumers in Tallahassee.

Do you have a home that needs to be consumed? If so, check out our Progressive Marketing Plan, it is getting homes sold in a market where most home sellers are failing! Don't be a victim of the housing market crash, sell your home now and buy back in at better rates and better prices later.

Joe Manausa, MBA is a 27 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

2 Responses to "Hindsight Shows The Real Cause Of The Housing Market Crash"

Robert Crowe wrote: With thousands of loans having rate escalations daily - the worst is far from over.

Posted on Tuesday, January 25th, 2011 at 2:04am.

CJ wrote: Really, the Federal government, through the Community Reinvestment Act, set all of this in motion. They laid the framework for all of this to occur, and in some cases, they used veiled threats to coerce reluctant banks into participating. It was 30 years in the making.

Posted on Tuesday, April 24th, 2012 at 11:16am.

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