Similarities Between the Great Depression and the Great Recession

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

The housing crisis of the late 2000s rocked the economy and changed the landscape of the real estate business for years to come. Decades of people purchasing houses unfordable houses and properties with lenient loans policies led to a collective housing bubble. When the banking system faltered and the economy wilted, interest rates were raised, mortgages increased, and people lost their jobs amidst the chaos. This all culminated in tens of thousands of American losing their houses to foreclosures and short sales, as they could no longer afford the mortgage payments on their homes. The United States entered a recession and homeownership no longer appeared to be a feasible goal as many questioned whether the country could continue to support a middle-class. Former home owners became renters and in some cases homeless as the American Dream was delayed with no foreseeable return. While the future of the economy looked bleak, conditions gradually improved. American citizens regained their jobs, the United States government bailed out the banking industry, and regulations were put in place to deter such events as the mortgage crash from ever taking place again. The path to homeowner ship has been forever altered, as loans in general are now more difficult to acquire and can be accompanied by a substantial down payment.

First, the housing market is starting to come back to business, but it is taking some time.

The recession of 2008 is also called the ‘Great Recession’, said to have begun in December 2007, and took a turn for the worse in September 2008, and it was a severe economic problem expanded globally. This recession affected the world economy, and is said to have been the worst financial disaster since the Great Depression. The decline in the Dow Jones this time was -53.8%. Since the official start of the recession in December 2007, and through June 2010 there have been about 2.3 million homes foreclosed in the United States. In 2012, the state with the most foreclosures in January alone was California, with 51,584 houses being repossessed. Unemployment during this collapse was 8.5%, and continued to increase to about 10% as of 2010. People’s reaction to this recession was a huge decrease in spending and borrowing from banks, but an increase in saving.

For the last several years, the one issue that has been bringing the United States into a state of trouble that it has not been seen since the great depression has been the monstrous Foreclosure problem. Thousands of people have lost their houses. Thousands of people have faced the dangers of debt and chaos. Thousands of people lives have been ruined because of the mistakes that Americans have done in this nation. In order to solve the problem, one must take a look at how it started and how this depression began. Around eight-nine years ago, the market in housing caused many people to chase after it. This caused a mistake of creating a domino affect that has hurt banks from lending out the high amount of money to people and finding out

The Great Depression was a severe worldwide economic collapse that occurred in the 1930s. It was a pivotal moment in American history. Its effects were not only felt in the United States, but spread worldwide. In response and as an attempt to rectify the calamity, President Franklin D. Roosevelt launched a set of federal programs called the New Deal.

Two economic factors affect supply in a stable housing market, price of related goods or similar houses, and the price of the good, best represented by style or size in the case of the housing market. The affluence of a community typically determines how much homes sell for in those communities, and therefore communities where a lot of people want to live become areas where average home prices are high. (Kumar, 1) There is little space in these affluent communities, and therefore little supply. A good example is New York City, where no homes are available, only apartment buildings, and very few apartments are actively exchanged each year.

The Great Depression was a time period in the United States between 1929 and 1932 caused by the stock market crash on October 29, 1929. It was a time of great sorrow and loss for many people across the U.S. From the start of the Great Depression, to the long anticipated ending, there were many effects on the people and the economy.

What was the Great Depression and what impact did it have? The Great Depression was the worst economic situation known to man. It started in the late 1920s, 1929-1939 to be exact. It was the very first severe depression ever encountered to our world. The impacts it had was that the stock market crashed harshly, there was bank failures, and the government couldn’t do much about it. Its not until Franklin D. Roosevelt took charge and created a “New Deal,” unlike the previous president, Hubert Hoover, he let our economy be in a complete state of depression.

The Great Depression and Great Recession were two unique events that had monumental impact on the economy. Both had similarities, and differences that made them unique. The Great Depression was caused by people living on credit, and when it was time to pay they didn’t have the money, this happened on a wide spread scale. The crashing of the stock market was what officially started the Great Depression in 1929. The great recession was caused by subprime mortgages as well, as risk taking by financial institutions. Much like the depression people were living over their heads, and when it was time to pay their bills they were unable to. Both the Great Depression and Great Recession were brought on by bubbles, for the Great Depression it was the stock market bubble, for the Great Recession it was the housing bubble.

Housing crises are avoidable. They are borne out of lapses in judgment from three main groups: lenders that do not make responsible lending decisions, buyers that do not make responsible buying decisions, and governments that do not make responsible legislation to govern either of the former parties. Each of them needs to be addressed in order to avoid repeating a sordid, destructive past.

The United States economy has been in trouble for the past couple of years. The foreclosure crisis is a condition that began due to the inability of homeowners to pay their mortgages. Foreclosure is a legal proceeding whereby a lender obtains a legal termination of a debtor’s right to redemption. The foreclosure rates have been increasing for a considerable period and certain steps have been put into place to solve the problem. While the government, financial institutions and the general public are highly aware of the crisis, the steps taken to combat the problem are still not sufficient as the foreclosure rates are still increasing.

Another idea is giving a tax credit to all buyers during the entire span of the recession. If a buyer knows there will be a tax credit, but only for a few years maximum (until the end of the recession), the buyer might rush to get into his or her house. No one knows how long a recession will happen, so people would want to buy as quickly as the sell, especially when they

The current bull market of the U.S economy has shown rising prices in securities, products, and services. The housing market is no stranger to the fluctuations of today’s volatility, for it goes with it. The real estate industry realizes growth when related industries experience growth. And the housing market realizes loss when related industries experience loss. Housing is interconnected with many other sectors and industries, so it is not sound to solely blame housing markets for their own oscillations. A major contributor to the Savings-Loans and Foreclosure crisis was unpaid loans (Root). Banks were making loans to prospective and current homeowners without sufficient guarantee of return on investment (ROI). It is this default of loaning on the part of consumers I want to provide a solution to minimize its effects.

The current real estate crisis that America finds itself in is one of the greatest challenges America has ever faced. America’s troubles are further compounded by increasing unemployment of American citizens and environmental problems like global warming. Solving any one of these problems would be a Herculean task, yet they must each be addressed in order to protect American families from disaster. However, it is possible to find a solution to the problems of the real estate crisis that can also be used to improve the problems of the unemployment and environmental destruction. The first part of the solution involves the United States government purchasing the homes that have been foreclosed and using them to offer temporary housing to