Sturm College of Law
Homeownership, Housing collapse, Subprime mortgages
The current quest to identify scapegoats upon whom to cast blame for the housing bubble collapse are fundamentally misdirected inasmuch as all bubbles, like all Ponzi schemes, inevitably collapse-the only question being one of timing. Focus should instead be placed on the causes of the bubble itself, for only by doing so can sound economic policies be devised in a manner that will prevent future bubbles. Primary causes of the creation of the housing bubble are extravagant house subsidies lavished disproportionately on the top tiers of income earners; restriction of the supply of housing through local exclusionary policies; social policies encouraging lenders to grant mortgages to marginal buyers; the promulgation of byzantine and barely intelligible government regulations; and the cynical withdrawal of housing prices from the Consumer Price Index.
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Robert Hardaway, The Great American Housing Bubble: Re-Examining Cause and Effect, 35 U. DAYTON L. REV. 33 (2009).