The housing slump: a look back at an earlier one from the Boston Globe

[Gormy Cuss]

Interesting parallels to an earlier housing market meltdown...

http://www.boston.com/realestate/news/blogs/renow/2008/01/what_happened_i.html

What happened in 1958?

Several readers have asked what caused the last housing slump longer than the current one, when the market declined for 11 straight quarters from 1956 into 1958.

The answer has some surprising resonances with our present predicament.

Housing slumped in 1956 after the federal government tightened mortgage lending standards, according to a 1960 book by the late UCLA professor Leo Grebler, "Housing Issues in Economic Stabilization Policy." (The whole thing is online here.)

The government was concerned that 'easy credit' was fueling a housing bubble, driving up prices and encouraging builders to flood the market with new homes....

[Fed_Up_Grammy]

1. Lots of homes in those days were bought with GI bill money---there

was a building boom.

[Gormy Cuss]

2. Yep. And some VA loans were made with no money down and closing costs rolled into the mortgage.

Sounds a lot like what's been happening recently but it wasn't limited to the VA loans.