The Big Housing Bubble
With Its Great Increase in Mortgage Lending

Resulted in Many Smaller Bubbles
That Caused a Temporarily More Prosperous Economy
Until the Economic Crisis of 2008

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The Housing Bubble Was BIG!
Housing values went   up,   up,   up
Home furnishing sales went  up,   up,   up
Building materials and commodity prices went   up,   up,   up
Consumer confidence and spending went   up,   up,   up

Because there was no prevention of The Big Housing Bubble and the huge infusion of credit and confidence in the economy

a Lot of Smaller, Secondary Bubbles Were Formed Such as:

  • The stock market reached record levels
  • Travel increased
  • Sales of most companies increased faster
  • Auto sales increased to new levels
  • Big mergers
  • Oil prices zoomed
  • Employment grew
  • Commodity prices zoomed
  • A lot of new office space was built
  • Food prices and sales up
  • Dining out increased
  • Banks expanded
  • Wall Street prospered
  • Consumer confidence zoomed
  • New plants and stores built
  • House furnishing sales expanded
  • Credit card debt zoomed

These accompanying bubbles resulted in more prosperous times - high employment, high sales, feeling of wealth, etc., all of these at a higher rate or percentage than would have resulted from a normal increase in prosperity without the housing bubble. People were deceived and thought we were just in a regular period of increasing economic growth.

  • From 1997 until 2006 house prices and sales increased substantially more than the normal rate with especially steep increases in Arizona, California, Florida, Nevada, and Washington, DC
  • Multi-trillion dollar subprime lending had an enormous effect on our economy
  • The idea of ever rising home values was widespread

Bad Part of Secondary Bubble Trouble

All of the prosperity we temporarily enjoyed was great. But it led our people into doing things they never would have done if they had realized how temporary the prosperity was. We are paying a terrible price now for the lack of awareness of what was going on and the fast growth instead of slower reliable growth that would have occurred without the housing bubble.

After our financial meltdown do not in most cases expect your sales, wealth, home values, etc. to return to bubble levels soon - even with economic stimulus. We should expect only a return to more normal levels.

Economists and Financial Analysts

They should make projections of what levels we would probably have reached if there had been no housing bubble and commercial building bubble.