Why did the housing industry crash in 2007?

Since the financial industry heavily invested in mortgage-backed derivatives, the housing industry’s downturn became the financial industry’s catastrophe. The 2007 financial crisis ushered in the 2008 Great Recession. In February 2007, existing home sales peaked at an annual rate of 5.79 million.

What was the 2007–2008 financial crisis?

The 2007–2008 financial crisis, or Global Financial Crisis ( GFC ), was a severe worldwide economic crisis that occurred in the early 21st century. It was the most serious financial crisis since the Great Depression (1929).

What happened to the housing market in 2009?

Even though the financial crisis was resolved by the start of 2009 the housing market continued to decline throughout 2009. There were over 3 million foreclosure filings for 2009. Unemployment rose to over 10% and the housing market crash created the worst recession since the early 1980’s.

Why did the housing bubble cause financial crisis?

According to Wallison, the reason the U.S. residential housing bubble (as opposed to other types of bubbles) led to financial crisis was that it was supported by a huge number of substandard loans—generally with low or no downpayments.