ABSTRACT
This chapter examines housing and mortgage credit for housing. It looks at the causes and patterns of financial crises, including the 2008–2009 financial crisis. The chapter discusses what happens in a housing bubble and a housing crisis; what causes a financial panic or a crisis; and what impact a financial crisis has on the real economy. The housing cycle, revealed both in new construction and in prices, follows the same general pattern as the cycle in the economy as a whole. Housing starts measure the number of housing construction projects that begin during a certain time period. Housing starts are the best reflection of how much home building is actually happening at each point in the cycle. The housing cycle has two main aspects: housing prices and physical housing starts. The length of a housing contraction is affected by both general business conditions and by the number of foreclosed houses that must be sold.
