When anything rises quickly and without a strong supporting foundation, it falls quickly. We see it in new housing sales and we see it stock markets when share prices surge.
This plunge will have ripple effects in all supporting industries in the housing sector. They all benefited from the dramatic growth - make hay while the sunshines - and now they are all facing the other side of the chart. Take note of the moderate growth in earlier years. Moderate. Stable. So, what caused the dramatic growth? Low interest rates? Perhaps. Though rates had been relatively low since 1999. Perhaps it was the growth and pervasiveness of sub-prime loans driving this situation. Now the plug has been pulled and the results are showing up.
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