2007-05-06 08:35:46 · 6 answers · asked by Gypsy Gal 6 in Society & Culture ➔ Cultures & Groups ➔ Other - Cultures & Groups
Investors pulled their money out of the stock market after those greedy CEO's and CFO's of companies like Adelphia and Enron bankrupted their corporations....When they stole money from the companies they lied on their SEC reports to make it sound like everything was still good, and then in a very short amount of time afterwards the shareholders' stocks in the company were worthless....since ppl didn't trust the stock market, they invested their money in things like real estate instead - which drove up the prices of houses and land all over the country
Since the prices of houses went up, some of the lower middle class ppl and ppl with bad credit had to take out adjustable rate mortgages because the rates were low....it's like when you see credit card deals that say "low introductory rate" - but then the rates will most likely go up after a while
when Alan Greenspan was the chairman of the Federal Reserve bank (which lends money to other banks across the USA), he kept the interest rates low for the banks so they would lend out more money - then when Ben Bernanke became the Fed Reserve chairman he raised the rates because he wanted to stop the high inflation rates (when money is worth more to ppl, they will spend it less - and less buying means less inflation)
When the interest rates went up, the ppl with the adjustable rate mortgages had their monthly payment increase by hundreds of dollars....ppl had to either sell their houses really fast (a buyer's market), or they defaulted on their mortgages and now the banks are selling the foreclosed properties
......
I was getting out of the military when the prices were still really high, but I didn't wanna spend a ridiculous amount of money on a 1,000 square foot condo in Orlando...so now I'm a 26 year old dude living with my family while going to school....so I'm kinda irritated about the housing boom and I'm kinda glad it's waning - that's my shpeil
2007-05-06 10:02:03 · answer #1 · answered by Anonymous · 0⤊ 0⤋
We look at the house payment as being the most costly monthly expense, without considering the high increase in other things such as car payments, insurance, telephone, gas and etc. Before we know it, our adjustable rates go up, and the other monthly cost rise higher than we thought possible. Then the income is less than the outgoing. Now you're operating in the red.
2007-05-06 15:47:39 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Because some of them took out loans with flexible interest rates - when the interest rates go up, they can't make the payments.
2007-05-06 15:39:47 · answer #3 · answered by Unknown 3 · 1⤊ 0⤋
Credit card debt & Consumerism
2007-05-06 17:20:59 · answer #4 · answered by aristocat 1 · 0⤊ 0⤋
Many people want to keep up with the "Joneses" and always speed more money than what they make.
This has happened to several people I know, and I mean several.
2007-05-06 15:41:58 · answer #5 · answered by Hillbilly 2 · 2⤊ 0⤋
outsourcing
APR
layoffs
can't find work
greed of CEOs and rich.
2007-05-06 15:41:36 · answer #6 · answered by robert p 7 · 0⤊ 0⤋