Lehman Brothers, the fourth largest investment bank on Wall Street, declared bankruptcy on the 15th of September 2008, becoming the largest bankruptcy in U.S. history. The investment house, which was founded in the mid-19th century, had become heavily involved in the U.S. housing bubble in the early 2000s, with its large holdings of toxic mortgage-backed securities (MBS) ultimately causing the bank's downfall. The bank had expanded rapidly following the repeal of the Glass-Steagall Act in 1999, which meant that investment banks could also engage in commercial banking activities. Lehman vertically integrated their mortgage business, buying smaller commercial enterprises that originated housing loans, which allowed the bank to expand its MBS holdings. The downfall of Lehman and the crash of '08 As the U.S. housing market began to slow down in 2006, the default rate on housing loans began to spike, triggering losses for Lehman from their MBS portfolio. Lehman's main competitor in mortgage financing, Bear Stearns, was bought by J.P. Morgan Chase in order to prevent bankruptcy in March 2008, leading investors and lenders to become increasingly concerned about the bank's financial health. As the bank relied on short-term funding on money markets in order to meet its obligations, the news of its huge losses in the third-quarter of 2008 further prevented it from funding itself on financial markets. By September, it was clear that without external assistance, the bank would fail. As its losses from credit default swaps mounted due to the deepening crash in the housing market, Lehman was forced to declare bankruptcy on September 15, as no buyer could be found to save the bank. The collapse of Lehman triggered panic in global financial markets, forcing the U.S. government to step in and bail-out the insurance giant AIG the next day on September 16. The effects of this financial crisis hit the non-financial economy hard, causing a global recession in 2009.

The Federal National Mortgage Association, commonly known as Fannie Mae, was created by the U.S. congress in 1938, in order to maintain liquidity and stability in the domestic mortgage market. The company is a government-sponsored enterprise (GSE), meaning that while it was a publicly traded company for most of its history, it was still supported by the federal government. While there is no legally binding guarantee of shares in GSEs or their securities, it is generally acknowledged that the U.S. government is highly unlikely to let these enterprises fail. Due to these implicit guarantees, GSEs are able to access financing at a reduced cost of interest. Fannie Mae's main activity is the purchasing of mortgage loans from their originators (banks, mortgage brokers etc.) and packaging them into mortgage-backed securities (MBS) in order to ease the access of U.S. homebuyers to housing credit. The early 2000s U.S. mortgage finance boom During the early 2000s, Fannie Mae was swept up in the U.S. housing boom which eventually led to the financial crisis of 2007-2008. The association's stated goal of increasing access of lower income families to housing finance coalesced with the interests of private mortgage lenders and Wall Street investment banks, who had become heavily reliant on the housing market to drive profits. Private lenders had begun to offer riskier mortgage loans in the early 2000s due to low interest rates in the wake of the "Dot Com" crash and their need to maintain profits through increasing the volume of loans on their books. The securitized products created by these private lenders did not maintain the standards which had traditionally been upheld by GSEs. Due to their market share being eaten into by private firms, however, the GSEs involved in the mortgage markets began to also lower their standards, resulting in a 'race to the bottom'. The fall of Fannie Mae The lowering of lending standards was a key factor in creating the housing bubble, as mortgages were now being offered to borrowers with little or no ability to repay the loans. Combined with fraudulent practices from credit ratings agencies, who rated the junk securities created from these mortgage loans as being of the highest standard, this led directly to the financial panic that erupted on Wall Street beginning in 2007. As the U.S. economy slowed down in 2006, mortgage delinquency rates began to spike. Fannie Mae's losses in the mortgage security market in 2006 and 2007, along with the losses of the related GSE 'Freddie Mac', had caused its share value to plummet, stoking fears that it may collapse. On September 7th 2008, Fannie Mae was taken into government conservatorship along with Freddie Mac, with their stocks being delisted from stock exchanges in 2010. This act was seen as an unprecedented direct intervention into the economy by the U.S. government, and a symbol of how far the U.S. housing market had fallen.

Graph and download economic data for Median Sales Price of Houses Sold for the United States (MSPUS) from Q1 1963 to Q1 2025 about sales, median, housing, and USA.

Graph and download economic data for All-Transactions House Price Index for the United States (USSTHPI) from Q1 1975 to Q1 2025 about appraisers, HPI, housing, price index, indexes, price, and USA.

The Global Financial Crisis of 2008-09 was a period of severe macroeconomic instability for the United States and the global economy more generally. The crisis was precipitated by the collapse of a number of financial institutions who were deeply involved in the U.S. mortgage market and associated credit markets. Beginning in the Summer of 2007, a number of banks began to report issues with increasing mortgage delinquencies and the problem of not being able to accurately price derivatives contracts which were based on bundles of these U.S. residential mortgages. By the end of 2008, U.S. financial institutions had begun to fail due to their exposure to the housing market, leading to one of the deepest recessions in the history of the United States and to extensive government bailouts of the financial sector.

Subprime and the collapse of the U.S. mortgage market

The early 2000s had seen explosive growth in the U.S. mortgage market, as credit became cheaper due to the Federal Reserve's decision to lower interest rates in the aftermath of the 2001 'Dot Com' Crash, as well as because of the increasing globalization of financial flows which directed funds into U.S. financial markets. Lower mortgage rates gave incentive to financial institutions to begin lending to riskier borrowers, using so-called 'subprime' loans. These were loans to borrowers with poor credit scores, who would not have met the requirements for a conventional mortgage loan. In order to hedge against the risk of these riskier loans, financial institutions began to use complex financial instruments known as derivatives, which bundled mortgage loans together and allowed the risk of default to be sold on to willing investors. This practice was supposed to remove the risk from these loans, by effectively allowing credit institutions to buy insurance against delinquencies. Due to the fraudulent practices of credit ratings agencies, however, the price of these contacts did not reflect the real risk of the loans involved. As the reality of the inability of the borrowers to repay began to kick in during 2007, the financial markets which traded these derivatives came under increasing stress and eventually led to a 'sudden stop' in trading and credit intermediation during 2008.

Market Panic and The Great Recession

As borrowers failed to make repayments, this had a knock-on effect among financial institutions who were highly leveraged with financial instruments based on the mortgage market. Lehman Brothers, one of the world's largest investment banks, failed on September 15th 2008, causing widespread panic in financial markets. Due to the fear of an unprecedented collapse in the financial sector which would have untold consequences for the wider economy, the U.S. government and central bank, The Fed, intervened the following day to bailout the United States' largest insurance company, AIG, and to backstop financial markets. The crisis prompted a deep recession, known colloquially as The Great Recession, drawing parallels between this period and The Great Depression. The collapse of credit intermediation in the economy lead to further issues in the real economy, as business were increasingly unable to pay back loans and were forced to lay off staff, driving unemployment to a high of almost 10 percent in 2010. While there has been criticism of the U.S. government's actions to bailout the financial institutions involved, the actions of the government and the Fed are seen by many as having prevented the crisis from spiraling into a depression of the magnitude of The Great Depression.

Housing Index in the United Kingdom decreased to 511.50 points in May from 513.50 points in April of 2025. This dataset provides - United Kingdom House Price Index - actual values, historical data, forecast, chart, statistics, economic calendar and news.

The Long Depression was, by a large margin, the longest-lasting recession in U.S. history. It began in the U.S. with the Panic of 1873, and lasted for over five years. This depression was the largest in a series of recessions at the turn of the 20th century, which proved to be a period of overall stagnation as the U.S. financial markets failed to keep pace with industrialization and changes in monetary policy. Great Depression The Great Depression, however, is widely considered to have been the most severe recession in U.S. history. Following the Wall Street Crash in 1929, the country's economy collapsed, wages fell and a quarter of the workforce was unemployed. It would take almost four years for recovery to begin. Additionally, U.S. expansion and integration in international markets allowed the depression to become a global event, which became a major catalyst in the build up to the Second World War. Decreasing severity When comparing recessions before and after the Great Depression, they have generally become shorter and less frequent over time. Only three recessions in the latter period have lasted more than one year. Additionally, while there were 12 recessions between 1880 and 1920, there were only six recessions between 1980 and 2020. The most severe recession in recent years was the financial crisis of 2007 (known as the Great Recession), where irresponsible lending policies and lack of government regulation allowed for a property bubble to develop and become detached from the economy over time, this eventually became untenable and the bubble burst. Although the causes of both the Great Depression and Great Recession were similar in many aspects, economists have been able to use historical evidence to try and predict, prevent, or limit the impact of future recessions.

The foreclosure rate in the United States has experienced significant fluctuations over the past two decades, reaching its peak in 2010 at 2.23 percent following the financial crisis. Since then, the rate has steadily declined, with a notable drop to 0.11 percent in 2021 due to government interventions during the COVID-19 pandemic. In 2024, the rate stood slightly higher at 0.23 percent but remained well below historical averages, indicating a relatively stable housing market. Impact of economic conditions on foreclosures The foreclosure rate is closely tied to broader economic trends and housing market conditions. During the aftermath of the 2008 financial crisis, the share of non-performing mortgage loans climbed significantly, with loans 90 to 180 days past due reaching 4.6 percent. Since then, the share of seriously delinquent loans has dropped notably, demonstrating a substantial improvement in mortgage performance. Among other things, the improved mortgage performance has to do with changes in the mortgage approval process. Homebuyers are subject to much stricter lending standards, such as higher credit score requirements. These changes ensure that borrowers can meet their payment obligations and are at a lower risk of defaulting and losing their home. Challenges for potential homebuyers Despite the low foreclosure rates, potential homebuyers face significant challenges in the current market. Homebuyer sentiment worsened substantially in 2021 and remained low across all age groups through 2024, with the 45 to 64 age group expressing the most negative outlook. Factors contributing to this sentiment include high housing costs and various financial obligations. For instance, in 2023, 52 percent of non-homeowners reported that student loan expenses hindered their ability to save for a down payment.

From the Summer of 2007 until the end of 2009 (at least), the world was gripped by a series of economic crises commonly known as the Global Financial Crisis (2007-2008) and the Great Recession (2008-2009). The financial crisis was triggered by the collapse of the U.S. housing market, which caused panic on Wall Street, the center of global finance in New York. Due to the outsized nature of the U.S. economy compared to other countries and particularly the centrality of U.S. finance for the world economy, the crisis spread quickly to other countries, affecting most regions across the globe. By 2009, global GDP growth was in negative territory, with international credit markets frozen, international trade contracting, and tens of millions of workers being made unemployed.

Global similarities, global differences

Since the 1980s, the world economy had entered a period of integration and globalization. This process particularly accelerated after the collapse of the Soviet Union ended the Cold War (1947-1991). This was the period of the 'Washington Consensus', whereby the U.S. and international institutions such as the World Bank and IMF promoted policies of economic liberalization across the globe. This increasing interdependence and openness to the global economy meant that when the crisis hit in 2007, many countries experienced the same issues. This is particularly evident in the synchronization of the recessions in the most advanced economies of the G7. Nevertheless, the aggregate global GDP number masks the important regional differences which occurred during the recession. While the more advanced economies of North America, Western Europe, and Japan were all hit hard, along with countries who are reliant on them for trade or finance, large emerging economies such as India and China bucked this trend. In particular, China's huge fiscal stimulus in 2008-2009 likely did much to prevent the global economy from sliding further into a depression. In 2009, while the United States' GDP sank to -2.6 percent, China's GDP, as reported by national authorities, was almost 10 percent.

The financial crisis in 2008 led to steep declines in the hose price in France, followed by some large increases. In 2024, the French property market contracted again, with the inflation-adjusted home price declining by *** percent in the fourth quarter of the year.

In April 2025, approximately ******* home construction projects started in the United States. The lowest point for housing starts over the past decade was in 2009, just after the 2007-2008 global financial crisis. Since 2010, the number of housing units started has been mostly increasing despite seasonal fluctuations. Statista also has a dedicated topic page on the U.S. housing market as a starting point for additional investigation on this topic. The impact of the global recession The same trend can be seen in home sales over the past two decades. The volume of U.S. home sales began to drop in 2005 and continued until 2010, after which home sales began to increase again. This dip in sales between 2005 and 2010 suggests that supply was outstripping demand, which led to decreased activity in the residential construction sector. Impact of recession on home buyers The financial crisis led to increased unemployment and pay cuts in most sectors, which meant that potential home buyers had less money to spend. The median income of home buyers in the U.S. fluctuated alongside the home sales and starts over the past decade.

The average price per square foot of floor space in new single-family housing in the United States decreased after the great financial crisis, followed by several years of stagnation. Since 2012, the price has continuously risen, hitting 168 U.S. dollars per square foot in 2022. In 2024, the average sales price of a new home exceeded 500,000 U.S. dollars. Development of house sales in the U.S. One of the reasons for rising property prices is the gradual growth of house sales between 2011 and 2020. This period was marked by the gradual recovery following the subprime mortgage crisis and a growing housing sentiment. Another significant factor for the housing demand was the growing number of new household formations each year. Despite this trend, housing transactions plummeted in 2021, amid soaring prices and borrowing costs. In 2021, the average construction cost for single-family housing rose by nearly 12 percent year-on-year, and in 2022, the increase was even higher, at close to 17 percent. Financing a house purchase Mortgage interest rates in the U.S. rose dramatically in 2022 and remained elevated until 2024. In 2020, a homebuyer could lock in a 30-year fixed interest rate of under three percent, whereas in 2024, the average rate for the same mortgage type was more than twice higher. That has led to a decline in homebuyer sentiment, and an increasing share of the population pessimistic about buying a home in the current market.

The Dow Jones Industrial Average (DJIA) is a stock market index used to analyze trends in the stock market. While many economists prefer to use other, market-weighted indices (the DJIA is price-weighted) as they are perceived to be more representative of the overall market, the Dow Jones remains one of the most commonly-used indices today, and its longevity allows for historical events and long-term trends to be analyzed over extended periods of time. Average changes in yearly closing prices, for example, shows how markets developed year on year. Figures were more sporadic in early years, but the impact of major events can be observed throughout. For example, the occasions where a decrease of more than 25 percent was observed each coincided with a major recession; these include the Post-WWI Recession in 1920, the Great Depression in 1929, the Recession of 1937-38, the 1973-75 Recession, and the Great Recession in 2008.

Following the drastic increase directly after the COVID-19 pandemic, the delinquency rate started to gradually decline, falling below *** percent in the second quarter of 2023. In the second half of 2023, the delinquency rate picked up, but remained stable throughout 2024. In the first quarter of 2025, **** percent of mortgage loans were delinquent. That was significantly lower than the **** percent during the onset of the COVID-19 pandemic in 2020 or the peak of *** percent during the subprime mortgage crisis of 2007-2010. What does the mortgage delinquency rate tell us? The mortgage delinquency rate is the share of the total number of mortgaged home loans in the U.S. where payment is overdue by 30 days or more. Many borrowers eventually manage to service their loan, though, as indicated by the markedly lower foreclosure rates. Total home mortgage debt in the U.S. stood at almost ** trillion U.S. dollars in 2024. Not all mortgage loans are made equal ‘Subprime’ loans, being targeted at high-risk borrowers and generally coupled with higher interest rates to compensate for the risk. These loans have far higher delinquency rates than conventional loans. Defaulting on such loans was one of the triggers for the 2007-2010 financial crisis, with subprime delinquency rates reaching almost ** percent around this time. These higher delinquency rates translate into higher foreclosure rates, which peaked at just under ** percent of all subprime mortgages in 2011.

Portugal, Canada, and the United States were the countries with the highest house price to income ratio in 2024. In all three countries, the index exceeded 130 index points, while the average for all OECD countries stood at 116.2 index points. The index measures the development of housing affordability and is calculated by dividing nominal house price by nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. An index value of 120, for example, would mean that house price growth has outpaced income growth by 20 percent since 2015. How have house prices worldwide changed since the COVID-19 pandemic? House prices started to rise gradually after the global financial crisis (2007–2008), but this trend accelerated with the pandemic. The countries with advanced economies, which usually have mature housing markets, experienced stronger growth than countries with emerging economies. Real house price growth (accounting for inflation) peaked in 2022 and has since lost some of the gain. Although, many countries experienced a decline in house prices, the global house price index shows that property prices in 2023 were still substantially higher than before COVID-19. Renting vs. buying In the past, house prices have grown faster than rents. However, the home affordability has been declining notably, with a direct impact on rental prices. As people struggle to buy a property of their own, they often turn to rental accommodation. This has resulted in a growing demand for rental apartments and soaring rental prices.

After a long period of steady increase in real estate prices in Spain, the market was hit by the global financial crisis of 2007, resulting in the burst of the Spanish property bubble. House prices have since picked up and in 2023, the average square meter price reached 2,809 euros - just slightly below 2008 levels. Though prices have risen across the whole country, some regions, such as the Balearic Islands, Catalonia, Madrid, and Andalusia, experienced faster growth than others. Additionally, the gap between newly built and existing home prices has widened. Spain’s real estate market behind others The property market has made great progress, but it is still far off the rest of its European counterparts, and it is positioned, in fact, at the bottom of the European list of the EMF’s house price index, which is led by Czechia and Portugal. Supply is a major factor influencing the price development. Many European countries suffer housing shortages due to sluggish construction activity, and Spain is no exception. In 2022, ranked among the countries with the lowest number of residential construction starts per 1,000 citizens in Europe. Buying vs renting As happens with many other countries, the affordability of buying a home and renting will differ considerably dependent on the area. In 2022, the average Spanish citizen needed between five and 18 years to purchase an average priced property in their region with their full salary, with Murcia and La Rioja being the most affordable regions. The house price to rent index shows that house price growth has been much faster than rental growth. That is good news for homeowners whose homes appreciate over time, but an issue for renters who are yet to purchase a property.

In 2022, the volume of commercial real estate transactions reached *** billion U.S. dollars, up from *** billion U.S. dollars in 2020. One of the reasons for the surge was the pandemic and the release of pent-up demand as the economy reopened. A real estate transaction refers to the process of passing the rights in a property unit from the seller to the buyer in return for an agreed upon sum. Effect of 2007-2008 credit crisis The U.S. real estate market reached its peak in 2007, just before the 2007-2008 credit crisis when the property market collapsed. The value of commercial property returns dropped between 2007 and 2009. Since 2010, the market has steadily recovered, and the volume of transactions climbed until 2015, and has levelled out since then. Types of commercial real estate The change in overall transaction volume is most likely impacted by the type of commercial properties which are more attractive to investors in a particular period. For instance, the interest in multifamily housing investment opportunities went down in the same period that interest in hotel investment opportunities went up.

On October 29, 1929, the U.S. experienced the most devastating stock market crash in it's history. The Wall Street Crash of 1929 set in motion the Great Depression, which lasted for twelve years and affected virtually all industrialized countries. In the United States, GDP fell to it's lowest recorded level of just 57 billion U.S dollars in 1933, before rising again shortly before the Second World War. After the war, GDP fluctuated, but it increased gradually until the Great Recession in 2008. Real GDP Real GDP allows us to compare GDP over time, by adjusting all figures for inflation. In this case, all numbers have been adjusted to the value of the US dollar in FY2012. While GDP rose every year between 1946 and 2008, when this is adjusted for inflation it can see that the real GDP dropped at least once in every decade except the 1960s and 2010s. The Great Recession Apart from the Great Depression, and immediately after WWII, there have been two times where both GDP and real GDP dropped together. The first was during the Great Recession, which lasted from December 2007 until June 2009 in the US, although its impact was felt for years after this. After the collapse of the financial sector in the US, the government famously bailed out some of the country's largest banking and lending institutions. Since recovery began in late 2009, US GDP has grown year-on-year, and reached 21.4 trillion dollars in 2019. The coronavirus pandemic and the associated lockdowns then saw GDP fall again, for the first time in a decade. As economic recovery from the pandemic has been compounded by supply chain issues, inflation, and rising global geopolitical instability, it remains to be seen what the future holds for the U.S. economy.

The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest *** trillion U.S. dollars at the end of 2007, it ballooned to approximately **** trillion U.S. dollars by May 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic - both of which resulted in negative annual GDP growth in the U.S. - showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached * percent in 2022, the highest since 1991. However, by *************, inflation had declined to *** percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at **** percent in ***********, before the first rate cut since ************** occurred in **************. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2023, the Fed reported a negative net income of ***** billion U.S. dollars, a stark contrast to the ***** billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over *** billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of ****** billion U.S. dollars in the same year.

As of January 2025, the largest all-time bankruptcy in the United States remained Lehman Brothers. The New York-based investment bank had assets worth 691 billion U.S. dollars when it filed for bankruptcy on September 15, 2008. This event was one of the major points in the timeline of the Great Recession, as it was the first time a bank of its size had failed and had a domino effect on the global banking sector, as well as wiping almost five percent of the S&P 500 in one day. Bank failures in the U.S. In March 2023, for the first time since 2021, two banks collapsed in the United States. Both bank failures made the list of largest bankruptcies in terms of total assets lost: The failure of Silicon Valley Bank amounted to roughly 209 billion U.S. dollars worth of assets lost, while Signature Bank had approximately 110.4 billion U.S. dollars when it collapsed. These failures mark the second- and the third-largest bank failures in the U.S. since 2001. Unprofitable banks in the U.S. The collapse of Silicon Valley Bank and Signature Bank painted an alarming picture of the U.S. banking industry. In reality, however, the state of the industry was much better in 2022 than in earlier periods of economic downturns. The share of unprofitable banks, for instance, was 3.4 percent in 2022, which was an increase compared to 2021, but remained well below the share of unprofitable banks in 2020, let alone during the global financial crisis in 2008. The share of unprofitable banks in the U.S. peaked in 2009, when almost 30 percent of all FDIC-insured commercial banks and savings institutions were unprofitable.