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La fin de l’American Dream

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  • Christine Rifflart

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

After an exceptionally long period of growth on the housing market, the activity has turned over from the beginning of 2006. It seems deeply engaged in a severe adjustment but we suppose this will not lead the economy in a global recession. After a presentation of the past trends (activity, house prices, wealth, mortgage debt), we try to profile these new homeowners and understand the circumstances which allowed households to become owners. The increase of debt could not have taken place if some specific conditions had not been satisfied (low interest rates, high liquidity because of the expansion of the secondary market, creativity of banks to get back the limits of indebtedness). With the increase of interest rates and the slowdown of prices, mortgage equity withdrawal become less attractive and the weakest households could be trapped in their financial commitment, coming back to the hard reality.

Suggested Citation

  • Christine Rifflart, 2007. "La fin de l’American Dream," SciencePo Working papers Main hal-03459593, HAL.
    • Handle: RePEc:hal:spmain:hal-03459593
    DOI: 10.3917/reof.101.0193
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03459593
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    References listed on IDEAS

    as
    1. Jonathan McCarthy & Richard Peach, 2004. "Are home prices the next \\"bubble\\"?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 1-17.
    2. Howard Lax & Michael Manti & Paul Raca & Peter Zorn, 2004. "Subprime lending: An investigation of economic efficiency," Housing Policy Debate, Taylor & Francis Journals, vol. 15(3), pages 533-571.
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