C, Home Buyer in Sacramento, CA

How does the housing crash of the 1990's compare to today's?

Asked by C, Sacramento, CA Wed Aug 24, 2011

I am interested in thoughts and opinions.

Help the community by answering this question:


Hi C,
I think you'd have to go back to 1929 to find a comparable crash in the US. Or you could look at the Japanese crash in the 90's, the lost decade, which has turned into another lost decade. Wait another year to buy, prices are declining. Good Luck
1 vote Thank Flag Link Thu Aug 25, 2011

I'm going to put my additional opinion in here in response to my good friend Jim...

While there was some relaxation of regulations in the congressional acts he was talking about, that is not what caused this housing meltdown.

What caused this meltdown was the Federal Government threatening lenders. Because the folks doing the lending had "loan qualification" requirement standards, the "guv-ment" felt these were discriminatory practices. affecting the "under-represented" classes that some how just couldn't meet those standards.

So you saw the "sub-prime" mortgages pop up. The "no down/low down, low doc/no doc" loans were all the rage... I remember seeing the "junk faxes" with a "start rate/or teaser rate" be the same as the "qualifying rate"... like a start rate of 1.95% and a qualifying rate of 1.95%... and the kicker... no down payment required...? ouch... ripe for fraud there...

To get a loan In the "olden days", Investors were required to put at least 20% down on a residential 1-4 unit type of property. Starting around 2001 on they were requiring less and less down...

The also relaxed FICO scores... under 600 and you could get a loan...

These loans were all sold on the market to institutional investors from all over the world as Mortgage Backed Securities... remember that...?

The same stinking rating companies like Moody's that gave these "mortgage backed" securities a AAA rating were in on the game with the big guys like Goldman Sachs and others... And Moody's...has the guts to lower the credit rating of the USA..? wow...

However... since this "man made" down turn started... the idiots who started this mess are asking us schleps out here to believe they have the answers with more stinking "guv-ment' intervention...?

They are the ones that caused this. They need to get out of the way.. some of them should be in jail... but they just kick too much money upstairs to have that happen....

Hey again... it's just my humble opinion....
1 vote Thank Flag Link Thu Aug 25, 2011

Your kidding.......nothing in recent time compares to today's housing mess which has been compounded by a number of other serious issues and the world wide economy.

Rest assured, there will be more to come! Let's hope it's positive....

1 vote Thank Flag Link Thu Aug 25, 2011
Well If you think this is Bad hold on because the Second wave is about to begin.
They are saying it won't happen, but they are just wishing and talking at the same time.
This is worse than the 1929 Crash but they don't want Panic to happen so they are just pretending.
If you look at the planet as a Financial unit you would see every thing is off balance. The Cash Investor and Private Lenders are the only way to fix this. If every one put their retirements into Mortgages right now they would not only make their principle back but the $260,000.00 each loan earns over the life of the loan, so I guess the half of 1% is what everyone wants instead of 6 to 18% annually. but you nor I can go in and purchase these home for cash and sell them to another Buyer, because the Bank and Government are not Smart enough to see past their own job security that there is a solution and they are not it.
They have tried every thing they know and we are worse off now.
I would like to see Investor Groups come in buy up all the bank Foreclosures and all the Distressed properties then resell then with new Loans so we can get on with it. If we leave it to them we will not recover from this...
Web Reference: http://www.Bank-Funding.com
0 votes Thank Flag Link Thu Aug 25, 2011
I disagree with Ed about de-regulation. The boom and bust effect was greatly increased by the Gramm-Leach-Bliley act of 1999 which repealed the Glass-Steagall act off 1933. Regulation is needed, consumer protection is needed. Unfortunately,when the regulated got to write the regulations, they wrote them to maximize their short term profits, while ignoring the long term health of the economy.

The housing decline of the early 1990's was about 20% in the hard hit areas, with flat appreciation, or small gains in some other areas. The 2005 through 2014 housing crash is lasting three times longer, the percentage losses have exceeded 80% in some zip codes. This time, no sub-market was left unscathed.
0 votes Thank Flag Link Thu Aug 25, 2011
Jim Walker, Real Estate Pro in Carmichael, CA
HI C; I think it's worse, deeper and will last longer than the crash of the 1990's. The lenders and regulators were way too late in addressing the issue and I believe have been very short-sighted in addressing the crisis. For instance, in 2007, it was impossible to get approvals on short sales. Knowing what we know now, lenders should have been falling over themselves to approve short sales.

That being said, this market is different and better for buyers due to the fact that homes prices are so low (and will probably go lower) while interest rates are also low. It's like buying a home in 1965 for very qualified buyers. Only buyers who plan on staying for at least 5 and better 10 years should jump in. The other silver lining is that if you have to move during that time, renting is a hot commodity right now.

Good luck.

Erin Phillips
Keller Williams Realty
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Thu Aug 25, 2011

It's much worse and over reaching bad government regulation is the cause.

I've been in this business since Jan 81 and prior to that I was in the Title Insurance and Escrow business from 1972.. I"ve seen the boom and bust of the late 70's and early 80's... the sky high interest rates... the boom of the late 80's that started around 1985 and 86... the bust in the early 90's and now this market...

This is the worst I've seen...Prices I think, are just about what they were in 2001 - 2002...

You know... it doesn't have to be this way in my opinion... The apparatchiks that run things back east and some of those nice folks that like to regulate everything here in California have just made it worse.

They've "over-regulated" loans killing the recovery. Remember, every closed real estate transaction has an economic "multiplier effect". Read a true story about a "high net worth" investor that couldn't get a loan... http://bit.ly/kb5zpO . When you "multiply" this story by hundreds of thousands of times all over the country, you get the situation we have now.

Ask yourself if we had someone else running things back east who understood business if things couldn't get better much quicker. All they'd have to do would be to loosen up some "over reaching" stinking regulations a bit and get out of the way.

But what do I know... I've only been in the business a short time and don't understand the "nuances" of how things should be run by the nice folks in Federal and State government. After all, they're more educated and therefore know how to run my business better. I'm just a guy who's been in "bidness' for a few short couple of years....

I hope this helps...

Make it a great day...
0 votes Thank Flag Link Thu Aug 25, 2011
Here in the northeast the housing crash in the 90's was worse as tehy flooded the market and prices fell far more than they did today. In Flordia and Arizona and perhaps other places it is worse now. But for NH, it was worse back then. Bakc then no one was buying, today cash buyers are buying up every property that is priced right they can, inventory is actually down
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Aug 25, 2011
What a great question. Looking to hear answers myself from agents and home owners who were in the Sacramento area during that time period. Having moved to the area at the end of the 90's, I can say home prices were just slighlty lower than they are today. That was 13 years ago. We have gone through the entire slope in that period. I would be happy to share with you current market results for the area in which you reside. Send me an email. Happy to help.

Thanks C!

Michele Peterson
Keller Williams Realty
0 votes Thank Flag Link Wed Aug 24, 2011
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