The Down Fall of Real Estate: A Few Theories on What Happened

 "What really caused the real estate meltdown? A lot of Republicans blame Bill Clinton, because of the Real Estate Reinvestment Act, which they say made it too easy for certain people to buy houses instead of continuing to live in Mr. Potter's slums. Even Mayor Bloomberg of New York says the Feds did it. Others, like Jeff Rubin, blame the price of oil. Now Christopher Leinberger notes another cause in the New York Times: the collapse of the car-dependent suburban fringe. It is due to a dramatic demographic shift that is causing cities to boom while the suburbs empty.

Many Boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

The Millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.

According to a recent survey by the National Association of Realtors, only 12% of future homebuyers want the suburban-fringe new house. Everybody is selling and nobody is buying, so the prices keep going down. It is perhaps simplistic to blame the whole thing on this, when there was the small matter of the subprime industry and the price of oil, but it is certainly a factor.


Comment balloon 2 commentsJenifer Lower • November 16 2012 09:42AM


The Real Estate Reinvestment Act allowed POORLY PERFORMING mortgages to be sold on the stock market which took a lot of people down and not just those homeowners who could not pay their mortgages.

It might have stopped there EXCEPT this Administration starting putting band aids on a full blown hemmorage and the patient is dying from blood loss.

Let the BANKS and mortgage firms decide if they want to help homeowners who want to stay in their homes and continue to pay a lower mortgage or do a deed in lieu so that they can RENT AND pay homeowners to LEAVE homes that are UNDERWATER so they can move and investors can move in and buy them.

This problem is being PROLONGED by the FEDERAL GOVERNMENT band aids!

Posted by Wallace S. Gibson, CPM, LandlordWhisperer (Gibson Management Group, Ltd.) over 6 years ago

Thanks for the post... Banks gave faulty loans to buyers that couldn't afford them...Now the banks foreclose  and tell the new buyer that they have to qualify with their bank to even submit an offer...NO LOSS on the banks part...I blame Wall Street Greed...And since I'm from San Francisco...The Republicans have to be the one's to blame..Lol



Posted by David Lewis, David Lewis CEO/Broker (American Lighthouse Estates Inc.) over 6 years ago