2008 Housing Market Crash

Question 1

What was the starting point of the crash?

Answer 1

Home loans accessible to borrowers who had low credit scores and a higher risk of defaulting on loans. They were called “subprime borrowers”.

Question 2

What were the “subprime borrowers” allowed to take out.

Answer 2

Adjustable-rate mortgages with low starting rates that would increase after a few years. Many people took out these loans resulting in an increase in borrowing.

Question 3

What caused the crash?

Answer 3

By 2008 borrowers were defaulting (stopping paying) on subprime mortgages in high numbers.
This resulted in the collapse of the financial markets and the start of the great recession.

Question 4

What factors contributed to the crash?

Answer 4

Unregulated markets, a massive amount of consumer debt and the collapse of home prices

Question 5

How Much Did Housing Prices Drop in 2008?

Answer 5

From July 2006 to January 2009, the national median house price dropped by 29%

Question 6

How Long Did the 2008 Housing Market Crisis Last?

Answer 6

Recovery began in 2011. Home prices had fully recovered by 2012