By: Madeleine Keller
In October of 2008, just one month before I was born, the stock market crashed. Many comparisons have cropped up in the 16 years afterwards that have led Americans to equate the economic downturn in 2008 to the infamous Great Depression in the 1930s. While the two have their similarities, one key distinction sticks out like a sore thumb; the crash in 2008 centered around housing and the housing industry, and it still impacts the American market today.
From the mid 1980s to the early 2000s, America experienced an abrupt housing explosion. Houses were built, people were happy and the government got loose, too loose. One of the main reasons for the crash was risk taking in the financial industry, especially when it came to houses. This dangerous handling of finances was fueled, like pure propane on a fire, by deregulatory policy practices by the US Government.
Deregulation in the context of government is defined by the Cambridge dictionary as: “the action of removing national or local government controls or rules from a business or other activity”. In the years leading up to the decline of the market, encouraged by the booming economy, the US government used these hands off policies in their regulation of the housing market as they collectively tore through the red tape regulating the financial industry. The policy remained embedded in the structural system, only boiling over when the United States least expected it.
The financial catastrophe had been simmering on the back burner for 20 years before the pot boiled over and America caught its mistakes. A series of deregulating acts were passed like the Garn-St. Germain Depository Institutions Act, an act passed in 1982 that was initially intended to help struggling banks but only led to riskier financial decisions and set a precedent for substandard government finance policies in the years to come. Inherently deregulation isn’t necessarily a detriment but of course, too much of anything can be fatal, everything must be done in moderation.
Now, 16 years later, America is finally seeing the consequences of the housing bubble in 2008. These times are unprecedented and housing is scarce. Inflation and the economy after Covid-19 are partially to blame, but structurally, light touch regulation of the financial sector has led to eventual decay of the American housing market. America is grappling with a new housing crisis, one that is built on the foundation of shortages of land, materials, lending and labor because of the crisis in 2008. This has driven up costs for builders who, incentivized by monetary desire, have less prerogative to build low cost and affordable housing.
Young people everywhere are struggling, fearful for the future as the cost of living increases and the quintessential white picket fence American dream seems to be slipping out of grasp. There is hope for the next generations, but only if we act now. The United States government can, and needs to do something about this problem. They can promote and incentivize builders to assemble more housing for middle class families, they can enforce policies upon rampant landlords, they can take a step back from hands-free policy decisions and they can lower property taxes. They can take steps towards a brighter future. Living is already hard enough without having to worry about eviction notices or whether or not you will have a roof over your head. It is a sad reality that 20 out of 10,000 Americans experience homelessness a year. Access to secure, reliable housing is essential, and a right that all Americans deserve. The white picket fence isn’t just the American dream, it is truly the American necessity.
The Bishop Kelly Newspaper 