American Housing Crash Top 10 Causes

1.The Federal Reserve Interest Rate Manipulation:
The Federal Reserve "the fed" created a storm through artificial interest rate manipulation!  Instead of a supply vs. demand, free-market based housing industry, 40-year-low interest rates set by "the fed" created an artificial demand for housing as an investment.  When it comes to crashing economies and creating bubbles, no-one does it better than the federal reserve.  "the fed", owned privately by a small number of multi-national elite families, "the fed" is no more "federal" than Federal Express and could care-less about crashing the entire U.S. economy.

When a countries entire banking system is run by privately-owned foreign interests, market booms and busts are inevitable and a great way for corporate wigs and "fed" insiders to consolidate, commit insider trading and reap rewards by timing the market-cycles that they create!

The ironic truth is that former Fed chief Alan Greenspan actually encouraged use of the seductive ARM and sub-prime loans!
In April 2005, Greenspan said:“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for
immigrants . . . With these advances in technology, lenders have taken advantage of credit scoring models and other
techniques for efficiently extending credit to a broader spectrum of consumers . . . Where once more marginal
applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by
individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime
mortgage lending . . . fostering constructive innovation that is both responsive to market demand and beneficial to consumers.”

Learn more of the truth about the "fed" here.

2. Home Flipper$ and Real Estate Speculators:
With the low-cost of borrowing due to low-interest rates, real estate became a get-rich-quick scheme for millions of investors and property traders.  House flippers and price speculators used the artificial demand in housing to buy properties and re-sell them for fast profits, sometimes buying and selling properties before they were even finished being built!

With so many property-flippers and speculators in the market, home prices began to sky-rocket as everyday home-buyers often were trapped into bidding-wars against real estate market profit seekers.  In addition, former everyday home-owners decided to get into the housing market and buy additional properties to get in on home prices that were rising into the stratosphere.  During the prime home-price boom-years (2002 - 2006), it wasn't uncommon for a home flipper to make gains of ten$-of-thousand$ and even hundred$-of-thousand$ of dollars by buying homes and reselling them a few short months later.

3. Panic Buying:  
Realtors and other real estate market insiders used the previous history of ever-rising home prices as a fear tactic to scare first time homebuyers into buying a home before prices got even higher!  Potential home owners and fence sitting home buyers were manipulated by an industry tactic known as Fear of Being "priced-out" of the housing market forever.
Quotes like "home prices never fall" and "real estate only goes up" were common sales tactics with realtors and home sellers everywhere.  Renters were ridiculed as being naive and "missing the boat" on real estate blogs and in conversations about housing "owning vs. renting" debates.  Millions of people across the nation were led to believe that if they didn't purchase a home immediately then they would be priced out of the housing market forever!
If home prices had never fallen in the past then it must have been impossible for prices to fall, right?....WRONG!
Past performance is never a guarantee of future performance in any market, especially a bubble market.

4. Subprime mortgages, Exotic loans and Loose Lending
It wasn't just fraudulent mortgages that helped inflate home prices.  Many exotic mortgage products were used to help potential home-buyers "qualify" for the loan. 
No-document loans, known in the industry as "liar-loans", were everywhere from big banks to small-town mortgage companies who didn't bother requiring a home buyer to actually have income to cover the mortgage payments.  Down payments were no longer required and many cases.  Ever-rising home values would outweigh and possible bad-loans and prevent even the jobless from missing payments. 
Homes became ATM machines for families to cash-out equity for home improvements, automobiles, vacations, furniture and more.  Needless to say the mortgage companies and loan officers were loving their hefty, although temporary profits!

5. Media Propaganda:
It's no secret that real estate is big business.  And big business means big profits for the advertising agencies.  The media was a major contributor in pumping-up the housing bubble.   The real estate industry became a leading source of revenue for many newspapers, magazines, billboards, radio stations and more.  Articles were printed that promoted the buying of homes and making renters feel like they were fools for not buying a home.  Money and finance magazines printed articles about the masses getting rich on real estate.  
Newspapers would print articles that had real estate agents saying that home prices are rising rapidly in (enter hometown here) because "everyone wants to live here" or because the local economy was great.
Real estate advertising everywhere was heavily involved and profited heavily by the mega housing bubble that was sweeping across the nation. Also, the Fed has a relationship with big multi-national media corporations which is largely un known by the public.

6. Mortgage and Appraisal Fraud:
Rising home prices were enticing to crooks too!  Dozens of cases a month of mortgage fraud and appraisal fraud became common in counties across the US.  Appraisers were pressured by lending institutions to inflate appraisal prices so the the loan could close.  Shady mortgage companies opened their doors by the ton so that they could reap the rewards of selling loans to desperate home-seekers and re-financing existing home owners into lower monthly payments due to all-time low interest rates. 
Mortgage companies became telemarketing monsters who would call homeowners over-and-over again until the papers were signed, sometimes without disclosing the terms of the loan or plain-out giving false information to the customer and many times forging documents to alter signatures, income, or other data to get the loan closed!
This caused a surge in fraudulent mortgage applications, false appraisals, and planting straw-buyers to purchase over-valued homes.  Hundreds of mortgage companies were under investigation for shady lending or had to close their doors due to pressure from the eventual crackdown on the fraudulent business practices.  Many mortgage company CEO's and even appraisers ended up serving jail time for these practices!

7. Realtors on Commission
Real estate agents across the nation, and especially in hot markets, began to see ever increasing profits due to earning higher commissions on the sales of bubble home prices.  Higher home prices equals higher commissions for the Realtor selling the property. 
During the real estate "boom-years", it wasn't uncommon for real estate agents in hot markets like Florida, California, Arizona, and other areas to make hundreds of thousand dollars a year for selling bubble priced houses to flippers and everyday homeowners alike!
Simply put, if you're paid on commission, a higher selling price and therefore a housing market bubble is a welcome event!

Instead of negotiating a better deal and lower sales price for the buyer, Realtors were not on the side of the buyers because it was not in the realtors best interest to have a lower selling price on a home because a lower price meant less commission for themselves.  Home buyers were encouraged to bid and bid higher as homes received sometimes multiple offers, thus raising the price even higher, all to the selling realtors delight! 

8. High home Prices = Bad Investment:  Rental Income Cannot Cover the Mortgage on a Bubble Priced Home.  Example: You pay $500,000 for a 3 bedroom / 2 bathroom home, borrowing at a 6% APR would put your mortgage payment near $3,000 a month.  That same home will only fetch half-of-that ($1,500 per month) amount if you are lucky. Obviously, the buyer of a bubble home will need to pay the difference out of their own pocket.  Throw in taxes, maintenance and, in some cases, HOA fees, and you better have some major money in the bank to pay the difference.

The rise in home prices made it extremely difficult for new wanna-be landlords to get into the housing market because the high mortgage payment would not cover what would be gotten in return for the rent.  Once the flipping game was over when their were no greater fools to buy the overvalued asset,  very few buyers were left as most wise investors had stopped buying homes or exited the market completely.

9. Foreclosures Double Edged Sword: Foreclosures hurt the housing market in multiple ways.  First, the surge of foreclosures puts pressure on the supply/demand ratio as a glut of bank owned homes hits the market in a given area.  Second, the sight of the foreclosures themselves puts it's entire neighborhood in a bad light as the eyesore of an abandoned property and the for sale signs that glut the street tell potential buyers "DON'T BUY, DON'T BUY".  Finally, the banks are desperate to unload foreclosed homes at a low-ball price, thus reducing the median sales prices and sales comparables for the surrounding area.  Banks are not in the property management business and will sell an empty home at fire-sale prices to avoid upkeep and maintenance.