1929: Great Depression causes housing mortgage crisis

Most people associate the 1920s with the stock market bubble and subsequent crash, but a housing bubble was also looming during that time.

It was more common than ever to finance the purchase of a home, and with more buyers in the market, real estate construction was booming. But balloon mortgages were still the norm at this point, and these loans’ affordable, interest-only payments led buyers to purchase homes they couldn’t afford. Many people were saddled with securities debt as well at this time, meaning they were overextended across the board. There were other issues, too, like land and home values lagging behind the growing mortgage debt, which helped to create the perfect storm for a housing crisis. And when the stock market crashed in a correction, that’s exactly what happened. The housing market bubble burst, causing major issues for homeowners and banks alike.

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