Housing Market Bubble
Storyboard Text
- Housing prices almost never go down!
- Housing prices have doubled since the mid-1990s. We'll wait until the prices drop.
- Come swim in our new pool sometime!
- 1 year later...
- Perfect, but expensive!
- This house looks perfect!
- For Sale
- Our real estate agent tells us that housing prices almost never go down. For as long as we remember, she's right. We consider following this advice, but ultimately decide against purchasing a house.
- We have a surprisingly reasonable quote with a low interest rate because of an ARM.
- Hmm should we buy this house?
- Housing prices have risen about 10%. We walk past neighborhood houses that we could've bought cheaper a few years ago. Our neighbor took out a cheap-equity loan and built a swimming pool. Some are also flipping houses to make profit. We decide we're missing out and want to purchase a home.
- You got the house congratulations!
- We see 5 houses and the 1 we love is at a ridiculously high asking price. Our agent tells us to hurry to make a bid because if we don't we'll lose the house. We're hesitant because last week we read some economists predicted a housing crash.
- How did this happen?
- We never should have bought a house!
- 18 months later
- We discuss bidding on the house during dinner and breakfast. With an ARM the payments will "reset" in 3 years, but we'll probably have moved up to a bigger house by then. The next afternoon, we call the agent to place a bid. The house is already sold at 10% above the asking price.
- It's the spring of 2007 and we finally got lucky enough to purchase a house. We made an instant, aggressive bid on a huge house with almost no money down.
- The down payment has been wiped and we owe more on the house than it's worth! We're still able to make payments, but our mortgage rate is about to reset. There's also rumors of layoffs at work.
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