Impact of Advancement in Technology, False Conclusion of Real Estate Bubble, Record Low Mortgage Delinquency, Irresponsible Media, U.S. Economic Policy Disaster: Evidence Supporting Eddison Walters Risk Expectation Theory of The Global Financial Crisis of 2007 and 2008

Abstract

Data analysis in recent studies by the current researcher presented evidence suggesting the existence of a real estate bubble preceding the Global Financial Crisis of 2007 and 2008 was a false conclusion. Data analysis from Walters (2019) resulted in 194.041 Mean Dependent Variable, 0.989 Adjusted R-square, 5.908 Square Error of Regression, and 488.726 Sum-of-Square Residual, from nonlinear regression analysis with the independent variable of “advancement in technology”, which proved to be the most significant factor causing the dependent variable of “home purchase price” to increase preceding the Global Financial Crisis of 2007 and 2008. Based on the findings of data analysis in Walters (2019), the researcher concluded the data confirmed the assertion agreed upon by Alan Greenspan and Ben Bernanke, it was impossible to have a real estate bubble, while citing the Efficient Market Hypothesis in 2005. Subsequent to 2005, alternative attempts to explain the existence of a real estate bubble were made by both former Chairmen of the Federal Reserve Board. Subprime lending and low interest rates were ruled out as the cause of the Global Financial Crisis of 2007 and 2008 in Walters (2019). As a result of the findings from Walters (2019), further investigation to gain an understanding of the impact of how the rapid adaption of advancement in technology influence on the rapid increase in home purchase price preceding the Global Financial Crisis of 2007 and 2008 is required. The purpose of this study is to gain an understanding of the role the rapid adaption of advancement in technology played in the mortgage industry and real estate industry in the United States, and the influence on to the rapid increase in home purchase prices preceding the Global Financial Crisis of 2007 and 2008 as a result of the changes. Insight into the rapid transformation of the mortgage industry and the real estate industry in the United States, and the role the transformation played in the crisis is a critical factor to understanding the impact of advancement in technology on the real estate market in the United States preceding the Global Financial Crisis of 2007 and 2008. Failure to consider the impact of rapid adaption of advancement in technology on the mortgage industry and real estate industry, and the transformation of the real estate market preceding the Global Financial Crisis 2007 and 2008, was a significant error which led to the false conclusion of the existence of a real estate bubble. An understanding of how the rapid transformation of the real estate market as a result of advancement in technology in the United States preceding the Global Financial Crisis of 2007 and 2008, will provide the critical knowledge to evaluate mistakes leading to the false conclusion of a real estate bubble preceding the crisis. The information gained from the current study will help avoid a future financial crisis of the same magnitude.

Increase in Consumer Debt Preceding Crisis Due to Advancement in Technology, Further Evidence Supporting the Idea No Real Estate Bubble Existed Preceding Crisis Presented by Eddison Walters Risk Expectation Theory of the Global Financial Crisis of 2007 and 2008: The Case for Eddison Walters Modern Economic Analysis Theory

“…The researcher presented evidence from correlation analysis that resulted in, 0.989 Adjusted R-square, 194.041 Mean Dependent Variable, 5.908 Square Error of Regression, and 488.726 Sum-of-Square Residual for the independent variable of "advancement in technology", and the dependent variable of "home purchase price" in Walters (2019). constant sensationalized claims by economists in the media of a real estate bubble and predictions of a coming real estate collapse, without presenting any evidence supporting the claims (Walters, 2020B). Another critical factor that significantly contributed to the financial crisis highlighted in Walters (2020B) was the ease at which the media ran with the theory of the real estate bubble and predictions of a real estate crash prior to the financial crisis, without demanding evidence in support of the claims.…”

“…constant sensationalized claims by economists in the media of a real estate bubble and predictions of a coming real estate collapse, without presenting any evidence supporting the claims (Walters, 2020B). Another critical factor that significantly contributed to the financial crisis highlighted in Walters (2020B) was the ease at which the media ran with the theory of the real estate bubble and predictions of a real estate crash prior to the financial crisis, without demanding evidence in support of the claims. Data analysis presenting record low mortgage delinquencies ninety days past due in danger of being foreclosed at the same time the media predicted doom and gloom in the United States housing market, was also highlighted in Walters (2020B).…”

Evidence From Data Analysis, Fifteen Developed Countries and the United States Home Prices Increase Between 1990 to 2006 Result of Advancement In Technology, Worldwide Economic Collapse and Great Recession Result of False Information by Media and Economic Policy Failures: Walters Real Estate Bubble Impossibility Price Transparency Theory, Real Estate Bubble Is Impossible, An End to Economic Policies Based on False Information

“…The result of the significant increase in qualified homebuyers caused a significant increase in the demand for homes (Muhanna, 2000;Straka, 2000). The increase in demand led to a rapid increase in home prices (Walters, 2020B).…”

“…Other (Walters 2020B). The economic policy failures by the U.S. Administration resulted in an acceleration of mortgage foreclosures and almost a complete shutdown in the United States construction industry due to the lack of mortgage lending.…”

“…The shutdown occurred just as the housing industry in the United States was experiencing a significant increase in demand. The significant increase in demand was due to a significant increase in the number of qualified homebuyers, resulting from the adaptation of online listings, online mortgage applications, and automated mortgage underwriting (Walters, 2020B). The adaptation of Dodd-Frank legislation one year and a half subsequent the changes to TARP, further restricted mortgage lending, at a time when mortgage lending was the most critical challenge facing the United States housing sector.…”