Foreseeing The Current Financial Crisis: a domino effect.

Even though bailout money distributed by the government was intended to lessen the financial burden of the housing market and to help banks start lending money again, the effects are non-existent. According to Global Property Guide “house prices continue to plummet, despite the government bail out packages. The 10 major cities have averaged an 18.6% drop in prices.
However, these catastrophic events could have been foreseen years ago when the housing market was weakening. I believe that there was no real value being added to accommodate the increase in prices, just a rapid increase in demand. Many of the homes there are very old, and had their own set of problems that come with age. Some were so severe that people would buy an old house for the land, demolish it, and then rebuild. Also, some people were buying homes just to fix them up and resell them. The housing market in Miami for 2006 had a median price of $377,000.
The city of Miami had such a prime housing market, that you could say that it is one of the biggest in the United States. So when the largest housing market is having problems, the rest will soon fall in due time.
In 2005 the housing market in Miami was booming with sky-high prices, yet everyone was still buying everything up. Everything was being developed and any piece of vacant land was being built upon. Even though Miami is a major city I felt that construction workers were building so many houses, strip malls, and high rises that they had over developed the city faster than it could handle. A year later when I went back the housing market had declined and realtors were discounting houses by a couple of thousand dollars to try to get rid of them.
From 2005-2008 I believe that the housing market was falsely inflated and over valuated, to promote higher prices. As the prices continued to rise, the wages of homeowners remained level. To make matters worse banks were approving loans, when they knew the potential homeowners could never afford mortgage.


Links:
http://www.globalpropertyguide.com/North-America/United-States/Price-History

http://www.miamism.com/2007-miami-dade-county-real-estate-market-conditio

http://money.cnn.com/2006/05/15/real_estate/NAR_firstQ2005_home_prices/index.htm