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.
Highlights
The purpose of the current research, is to gain an understanding of the role the rapid adaption of advancement in http://ibr.ccsenet.orgInternational Business ResearchVol 13, No 7; 2020 technology played in the mortgage industry and the real estate industry in the United States, which led to the rapid increase in home purchase prices preceding the Global Financial Crisis of 2007 and 2008
Failure to consider the impact of the rapid adaptation advancement in technology on the mortgage industry and the real estate industry preceding the Global Financial Crisis was a significant error, which led to the false conclusion of the existence of a real estate bubble preceding the Global Financial Crisis of 2007 and 2008
Ho: The evidence suggested, the failure to consider the impact of rapid adaptation of advancement in technology on mortgage lending and the real estate industry in the United States was not the most critical factor that led to the false conclusion of the existence of a real estate bubble in the United States preceding the Global Financial Crisis of 2007 and 2008
Summary
The purpose of the current research, is to gain an understanding of the role the rapid adaption of advancement in http://ibr.ccsenet.orgInternational Business ResearchVol 13, No 7; 2020 technology played in the mortgage industry and the real estate industry in the United States, which led to the rapid increase in home purchase prices preceding the Global Financial Crisis of 2007 and 2008. Gaining understanding of the rapid transformation of both the mortgage industry and the real estate industry in the United States preceding the Global Financial Crisis of 2007 and 2008, will provide the critical knowledge for evaluating the mistakes leading to the false conclusion of a real estate bubble preceding the crisis. The researcher called for further investigation into the impact of rapid adaption of advancement in technology on mortgage lending and real estate marketing in the United States preceding the Global Financial Crisis of 2007 and 2008. The knowledge gained from the current research is critical to understand of the circumstance that led to false conclusion of a real estate bubble preceding the Global Financial Crisis of 2007 and 2008. The knowledge gained is critical to avoiding the same mistake, leading to another financial crisis of the same magnitude in the future
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