The short and simple answer is that all time, record breaking levels of 1) consumer borrowing and spending combined with 2) irresponsible, immoral, unethical, excessively greedy, and illegal lending practices between 1998 and 2004 led to the development of all time record breaking levels of payment delinquencies, in all consumer debt categories (not just real estate), starting in late 2004 and early 2005.  These payment delinquencies started a massive, negative, domino, ripple sequence of events that led to the development of many and very serious financial problems in the U.S. real estate market and overall economy.  Collectively, these financial problems represent America’s financial crisis and because these problems are catastrophic America’s financial crisis can now officially be classified as the Second Great Depression. Read More

(Here is an excerpt from my Financial Crisis Solutions Book, which I wrote in the Spring of 2008.)

When I say worst real estate market in U. S. history here’s what I mean. Since the year 2004 the United States has slipped into the strongest Buyer’s Market of all time. A Buyer’s Market traditionally favors home buyers. Why? Because the number of Sellers (supply) is greater than the number of Buyers (demand). As a result real estate values will decrease in this type of real estate market. However the United States has never seen a Buyer’s Market like the current one and believe me it will never see another one like it ever again. Here’s why.

Throughout the history of the United States an occasional Buyer’s Market, that results in real estate values decreasing, has been good. Why? The reason is because it helps stabilize and realistically equalize real estate values that have increased too quickly and for the wrong reasons. However the existence of the current and strongest Buyer’s Market of all time, which has developed since the year 2004, has not been good for the U. S. real estate market and overall economy. Why? Because this Buyer’s Market has resulted in the number of home sellers (supply) increasing to unbelievable, unprecedented, and record breaking amount levels. This market has also resulted in the number of home buyers (demand) decreasing (ratio wise) to unbelievable, unprecedented, and record breaking amount levels as well. As a result of skyrocketing supply and plummeting demand not only will it take potentially years to sell the inventory of real estate that is currently for sale but during this period of time real estate values will drop like lead balloons. What’s going to make matters even worse is that as more and more Americans and their businesses continue to experience financial and psychological problems, during the existence of this real estate market and overall economic Financial Crisis, the supply of real estate will continue to dramatically increase while the demand for real estate (ratio wise) will continue to dramatically decrease. This scenario is definitely not a good one for the United States to be in. Why? Because as America’s real estate values continue to decrease, so will the amount of America’s real estate equity continue to decrease as well. When you decrease and potentially eliminate real estate equity, which by the way is 1 of the 6 Fundamentals of the U. S. economy, from America’s economic growth formula it will result in significant deterioration of the U. S. real estate market. This then leads to significant deterioration of the overall economy as well. Why? Because whatever the direction the real estate market goes in the overall economy will follow due to the fact that the real estate market is one of the main vertebra that supports the U. S. economy’s backbone. Remember it’s this backbone that enables the U. S. economy to: 1) lay down, 2) get up, 3) sit down, 4) stand up, 5) walk, 6) jog, 7) run, and 8) sprint. So as you can see the condition of the U. S. real estate market has and always will have a tremendous impact on the condition of the overall economy. By the way I will be going in great detail about how important the existence of real estate equity is to the growth and prosperity of the U. S. real estate market and overall economy in Section #2 of this book. Read More