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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (59506)8/9/2006 10:32:07 PM
From: 8bitsRead Replies (3) of 306849
 
"The housing price collapse in 1990 was precipitated by the collapse of bubble psychology - no suckers left to buy.

The 1990 housing price collapse was also precipitated by declining interest rates, and a robust economy.

The decline in housing prices did precipitate a recession a year later in 1991. But the recession in 1991 didn't cause the housing price collapse in 1990."

Elroy if memory serves me I thought housing slowed dramatically after Iraq invaded Kuwait in early August of 1990. It may indeed have been slowing before but that put the nail in the coffin since there was almost immediate talk of war (which was substantially less cavalier in nature than the current Iraq war..) and cut off of oil supplies from the Persian gulf. I know of realtor who had purchased 3 homes in the Sacramento area in late Spring with the intention of fixing them up over the summer and flipping them. His timing was horrible since not only had he put up the money for the down payments he had purchased the material for the remodels and was 80% through the process when the war started. He ended up walking away from all 3 at a full loss.

Also there was also a 21% decline in the Dow Jones (with a 20% decline being defined as a bear market..)

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