U.S. Housing Bubble In Sik Chung

 1. Timeline of Housing Bubble  2.Cause -Doc-com effect -Historically low interest rate -Financial instrument(Subprime)  3.Question Outline

 Early 2000: Recession.  2001:U.S lower Fed funds rate 11 times.  2002: Annual home price appreciation of 10% or more  2003: Federal Reserve Chair Alan Greenspan lowers federal reserve’s key interest rate to 1%, the lowest in 45 years Timeline of Housing Bubble

 2004–2005: Arizona, California, Florida, Hawaii, and Nevada record price increases in excess of 25% per year.  Fall 2005: Booming housing market halts abruptly; from the fourth quarter  2006: Continued market slowdown. Prices are flat, home sales fall Timeline of Housing Bubble

 The Subprime mortgage industry collapses, and a surge of foreclosure activity  September 17: Former Fed Chairman Alan Greenspan said "we had a bubble in housing" Timeline Housing Bubble

 1.Dot-com Bubble and September 11 th. -the stock market crash in Dot-com and technology sector. -Many people were looking for other invest source -Displaced from fallen stock market to real estate -Belief that housing is a good investment. Cause

 Historically low interest rate - The Federal Reserve cut short-term interest to historically low levels, from about 6.5% to just 1%. -Between 2004 and 2006, the Fed raised interest rates 17 times, increasing them from 1% to 5.25% Cause

 Financial instrument -Subprime mortgage - In March 2007, the United States' subprime mortgage industry collapsed due to higher-than- expected home foreclosure rates, with more than 25 subprime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale Cause

1. Next Bubble? -Green Energy -Bio-tech 2. How to prevent bubble? Question