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U.S. housing: A tale of many cities

Posted on 25 April 2012

One of the reasons U.S. policy makers failed to see the financial crisis coming was because they misread the housing market. In 2005 and 2006, U.S. treasury secretary John Snow said repeatedly that there was no such thing as a national housing market. Home prices were dictated by local factors, Mr. Snow and almost everyone else believed. That’s why troubling signs in places such as Florida and Arizona didn’t register as an issue worthy of national attention.

We know now that Mr. Snow and others were severely mistaken. They missed that the United States was in the grip of a home-buying frenzy, driven by cheap credit, an explosion of securitization, and shoddy lending standards. It was a national bubble, and prices plunged in concert across the country………………………………………..Full Article: Source


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