4. Chairman Greenspan Counts on Housing

For most Americans, owning a home is a deep-seated and long-standing desire. The quest for home ownership has arguably motivated households’ financial decision making since the nation’s founding. Yet why, in the middle of the century’s first decade, did so many of us decide to buy houses all at once? During the peak of the housing boom in 2005, an astounding proportion—more than one-tenth—of the nation’s homes were bought and sold.

Many factors drove this home-buying binge, but the biggest was easy credit—more specifically, the period’s record-low mortgage rates. In a normal year, more than three-fourths of all home sales require a mortgage loan, and, on average, about three-fourths of a home’s purchase ...

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