A Perpetual Housing Bubble

  • November 18, 2015

If history repeats itself, are we bound for a perpetual housing bubble? Let’s explore this idea.
 
The economic crisis of the late 2000s is not the first time Americans have experienced widespread economic and financial devastation. One obvious example would be the Great Depression that began on Black Tuesday October 29, 1929. The crash of the stock market on this day resulted in a nationwide panic as investors were wiped out, left for broke, and the flow of cash came to a near halt. Families were forced to move since annual incomes were halved on average. Stocks were nearly worthless and confidence around the country disappeared quickly. The Great Depression went on to last through 1939 and even then the economy did not see full recovery until the 1950s.
 
While we have certainly learned from the past, the housing market crash of the late 2000s shows many similarities in behavior that found us in the same trouble as we did in the 1920s. Stock prices increased at rates that “could not be justified by anticipated future earnings” (History.com). 
With the downturn in the economy, people lost their jobs, homes, and confidence. In order to fix the problem, banks were bailed out and received government loans to keep their doors open. Sound familiar?
 
Many today feel our latest economic failing was “solved” in the same way the Great Depression was handled. Big banks were bailed out from handling money improperly thereby continuing to spread hardships. If history is going to repeat itself, we are not close to recovering from the housing crisis.
 
So will we continue experiencing a perpetual housing bubble and ultimate crash afterwards? While it seems we are heading down that path, only time will tell.

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