You are on page 1of 5

Walton 1

Chyanne Walton
6 April 2014
Professor Koning
English 113B
Project Text: Housing Bubble

The housing bubble was an economic crisis that affected the United States housing
market. As result of the housing bubble crisis people lost their homes. Before the housing bubble
surfaced, people were purchasing homes to live the American dream. However, this dream came
with nightmarish consequences; people were required to take out loans in order to purchase these
expensive homes and were subject to abuse by greedy lending companies who issued loans to
risky buyers such as low-income families, minorities, and young adults.
Risky lenders would issue out loans to families they knew were incompetent of paying.
They targeted specific buyers they knew would potentially foreclose or go bankrupt due to their
pursuit. The reason they knew is because of their annual incomes, majority of the families barely
made enough to pay for their homes. Now that homeowners are having to pay on the principal,
combined with rising taxes and utilities, many of these marginal mortgagees can't make their
house payments. Once families couldnt pay majority of them was forced into taking out loans
and second mortgages to pay for their regular monthly expenses. Additionally, the housing
market in many parts of the country has cooled considerably, and thousands of homeowners now
are in houses not worth what they paid and unable to make their payments.
Walton 2

Within this time there was a lot of people purchasing homes and taking out these risky
loans to achieve their American dreams. The idea of the American dream is to achieve some sort
of happiness within your consumer ways. The happiness comes from your home or
accomplishments, which everyone intends to achieve over a lifetime. Young adults and families
were trying to achieve this American dream but had no idea what they were in store for. All
these families wanted was to purchase a home but instead they got expensive loan rates and a
high mortgage they couldnt afford once the housing bubble started to take place.

According to William Grigg of The New American, The housing bubble, in turn, has
inflated a huge consumer credit bubble as consumers exploiting decreases in Fed-controlled
interests rates, have repeatedly refinanced their mortgages to consolidate debt. The economy
came down and took the housing market with it, thats what caused the housing bubble to burst.
It caused interest rates to become lower, the demand for housing to rise and therefore prices
increase. A lot of people were not able to afford their homes once these prices increased.
A key cause of the housing bubble is social class. Social class is based on a persons
income and social status. If youre receiving a high salary and live in a neighborhood with
surrounding people like yourself you would be considered high class and so on. It is important
because the high class didnt want fortunate or less fortunate families/races coming into their
neighborhoods. Bell hooks said that, It never ceases to amaze me that New York City is one of
the most ethnically diverse cities in the world, yet racial and ethnic segregation continues to
inform housing practices both in terms of the neighborhoods individuals choose to live in, who
landlords rent property to, and who is able to buy. (Hooks 132) Housing is racially segregated
Walton 3

because of certain races prefer segregated housing. According to Hooks, research Studies
indicate that while an overwhelming majority of black people would prefer to live in mixed
neighborhoods, most white people prefer segregated neighborhoods or accept racial integration if
it means one black person or family lives in their area. (Hooks 142)

Less fortunate or low middle class families werent accepted in every neighborhood. A
lot of the white tenants didnt feel comfortable living with blacks in their apartment buildings.
They didnt want low class people in their middle and high class neighborhoods. White people
preferred their communities dominantly white. Hacker documents that irrespective of their
political beliefs, hardly any white folks choose to live in an area where half or more of the
residents are blacks. (hooks 142) Once blacks did begin to migrate in dominantly white
neighborhoods they moved out and did not come back. And in those cases where black people
move into a predominately white neighborhood, if our presence exceeds 8 percent, whites
usually leave and no new white people move in. (hooks 142) I think that white people just
preferred living around their own race although living with a different set of people wouldnt
have changed anything. Ironically, of course, there are many upper-class fancy white
neighborhoods tyrannized by crimes perpetrated by white folks, yet this fact does not change
property values or lead these residents to distrust all white people. (hooks 143)

After the housing bubble burst people were left in bankruptcy with no homes or jobs.
People suffered a lot from the burst because not only did they lose their jobs they lost their
homes and for a lot of people this torn their families. People were left with bad credit and debt.
Walton 4

Because the housing bubble was predicted by Bell hooks for some it came as no surprise but for
those who were not aware it struck them as a nightmare.





















Walton 5




Work Cited
"EDITORIAL: Housing Turmoil: Fallout is Going to Be Painful, but the Market Can Handle It."
Lufkin Daily News, (2007): Web. 6 April 2014.
Grigg, William Norman. "Will the Housing Bubble Burst?." The New American, 20.10 (2004):
20.Web 2 April 2014.
Hooks, Bell. Where We Stand : Class Matters. New York: Routledge, 2000.
"Housing woes take bigger toll on economy than expected: Paulson". AFP. 2007-10-17.Web 6
April 2014.