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The Housing Boom and Bust Hardcover – April 24, 2009
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“An economic primer on the housing bubble, but more importantly, it is an examination of the ruling class's inability to leave well enough alone.”
“Sowell's account qualifies the standard story that greedy investment bankers and mortgage brokers caused the whole crisis.”
The Washington Times
“For anyone looking for a straightforward and honest discussion of the origins of our current crisis, informed by a deep understanding of both economics and politics, The Housing Boom and Bust is required reading.”
About the Author
Top Customer Reviews
Sowell begins with an accounting of how housing prices across the U.S. diverged from their relatively low prices of the early 1970s, especially along the California coast. The "standard" for housing expenditures used to be about 25% of gross income - this recently grew to as high as 60% in some areas (eg. Salinas, California).
Sowell contends that a major cause for California's rapid rise, beginning in the 1970s, was land restrictions that set aside areas for "open space," "protecting the environment," "historical preservation," etc. (The population increase during that period was almost equal to the national increase rate.) He cites an international study of urban areas around the world that found 23 of 26 areas with the highest land-price increases had strong "smart-growth" policies. Minimum lot-size laws also raise land costs of building a house - here, he points to Houston (incomes rose faster there than in the nation overall, but also lacks zoning laws) and a Coldwell Banker estimate that homes there costing $155,000 would cost over $1 million in San Jose.
Sowell goes on to point out that first-time buyers are limited in their ability to provide a large down-payment - averaging less than $30,000, vs. over $100,000 for repeat buyers.Read more ›
The frightening part is that those in government who put the practices into place that led to the economy collapsing like a house of cards are still in power and running things in Congress, and the new administration sees the crisis as an excuse to implement policies that will have far reaching effects on the future of this country.
If there is one flaw in the book I would have liked Sowell to go into detail about the use of subprime backed securities that caused toxic assests to infiltrate every aspect of our economy and the economy of the world.
Thomas Sowell has done it again. Using his inimitable clarity, he analyzes just went wrong with the housing market, and how it contributed to a cascading, international financial crisis. The short answer? Government attempts to "create affordable housing" for lower income Americans. Who could oppose that goal? Unfortunately, the goal bore no relation to the actual consequences of the policies. A series of decisions over a number of years led to a degrading of eligibility standards on mortgages. This not only created a housing bubble. It filled the financial system with extremely risky, and unsustainable, financing schemes that would never have existed if the federal government had not attempted to manipulate the market in the first place.
The book is remarkably timely. Sowell applies his analysis to the current "stimulus" plan, and suggests that the Obama administration is using the crisis "to fundamentally and enduringly change the institutions of American society." Sound harsh? Here's what President Obama's chief of staff Rahm Emanuel said just before the President took office: "You never want a serious crisis to go to waste.... What I mean by that is that it's an opportunity to do things you could not do before." Indeed.
Jay W. Richards, author of Money, Greed, and God: Why Capitalism is the Solution and not the Problem
Most Recent Customer Reviews
Dr. Sowell is the best writer on economics I have ever encountered! He clarifies complicated problems in a very readable and direct way. Read morePublished 13 hours ago by Charlie
Another great read by the eminent Professor Thomas Sowell. Like the rest of his books - very informational and easy to understand. Read morePublished 1 month ago by Michael Vineyard
epic analysis and history of the housing boom and bust. Written in classic razor sharp Sowell fashion. I learned so much from this book!Published 1 month ago by Texan
I purchased this book after my wife and I went to see "The Big Short" at a local theater. The movie was clever and well-done artistically, but if you want to know the real... Read morePublished 4 months ago by Robert McVerry
The Housing Boom and Bust: Revised Edition was a good read for the layman. It was a very informative perspective of how and when the 2008 housing bubble started and the impact of... Read morePublished 6 months ago by DEXTER COCHNAUER
This is a most excellent book! Sowell presents a clear and convincing description of the mechanics of the housing boom and bust and the economics disaster which resulted. Read morePublished 11 months ago by Harold M. Martin