3. Turmoil in Global Housing Markets: Implications for the Future of Housing Finance

In the wake of the global financial crisis of 2007–2009, it is important to understand the implications of this economic tsunami for the future of housing finance, not just in the United States, but around the world. We begin with the collapse of the housing and mortgage markets in the U.S.

The U.S. Housing Crisis1

The residential mortgage market in the United States has worked extremely well over the past two centuries, enabling millions to achieve the dream of homeownership. The homeownership rate reached a record high of 69.2% in the second quarter of 2004 before declining to 65.9% at the end of the second quarter in 2011 (see Figure 3.1), with all segments ...

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