The+Real+Estate+Collapse

**THE REAL ESTATE BUBLE IN MICHIGAN**

== From the early 1990’s on, the Michigan (and U.S.) real estate market was headed for disaster. New homes were being built across the state at an breakneck rate; builders barley able to keep up with the demand for new homes. As the prices of homes kept steadily increasing, people began to view purchasing a home as a failsafe investment. In addition to this flawed thought process, banks helped create a volatile environment for those purchasing homes by giving loans to individuals that could barley afford to make the payments. These loans left homeowners on the boarder of financial ruin and success. With even the slightest alteration in income, these individuals would default on their loans, and within a matter of month, be forced to let their homes go into foreclosure. This unsettling fear became a real life disaster for millions of Michigan residents. The auto industry entered a state of economic lysis, further enabling the downward spiral as tens of thousands of workers were laid off. Today, Michigan’s real estate market is very different from what it was just five years ago. Home prices across the state have decreased as much as 50%. Homes the once were in the $300,000 price range can be purchased for $150,000. ==

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== As we look back today, there are many places that blame can be placed. Some believe that the banks alone are responsible for giving loans that were at a high risk of failure. Others believe that it was the consumers fault for placing such inflated values on homes. Additionally, it is the opinion of some, that the government is to blame; reducing regulation and failing to monitor banks loan practices at a sufficient level. It seems to be the general consensus that no one party is to blame. The housing market crash was the result of many factors, including those described above. == == In the early 1800’s a very similar situation arose for Michigan. With land speculation at an all time high, the chance of failure was looming. Land speculation is a practice which still takes place today. Individuals by a property at what they believe is a low price, with the goal of capitalizing on their investment in the future by selling their property for a higher price. In 1837, the bubble popped and many Michiganders were left with property worth far less then they paid for it. This is very similar to the housing collapse of 2007-8. Although on an entirely different ==

---Speculation is never a good thing. As the artificial market rose up bankers also began betting on it, making the market toxic. Then, when it crashed, it crashed hard and bankers got off without a scratch. They aren't totally to blame, the people were also a bit crazy with their careless investments. There have been some solutions to this, as some people have tried to make [|Bills] which force banks to pay money for each foreclosure. (Watson) [|Investors]

