Side effects

Unprecedented runup in house prices between 1997 and 2005 had a number of wide ranging effects on the economy of the United States.
One of the most direct effects was on construction of new houses. In 2005, 1,283,000 new single-family houses were sold, compared with an average of 609,000 per year during 1990–1995.[151] Largest home builders, such as D. R. Horton, Pulte, and Lennar, saw their largest share prices and revenues in 2004–2005. D. R. Horton's stock went from $3 in early 1997 to all-time high of $42.82 on July 20, 2005. Pulte Corp's revenues grew from $2.33 billion in 1996 to $14.69 billion in 2005.[152][153][154]
Mortgage equity withdrawals - primarily home equity loans and cash-out refinancings - grew considerably since early 1990s. According to estimates by US Federal Reserve, in 2005, homeowners extracted $750 billion from equity of their homes (up from $106 billion in 1996), spending two thirds of it on personal consumption, home improvements, and credit card debt.[155]
It is widely believed that increased economic activity caused by expanding housing bubble in 2001–2003 was partly responsible for prevention of full-scale recession in U.S. economy following the dot-com bust.[156]
Rapidly growing house prices and increasing price gradients forced many residents to flee expensive centers of many metropolitan areas, resulting in explosive growth of exurbs in some regions. Population of Riverside County, California almost doubled from 1,170,413 in 1990 to 2,026,803 in 2006, due to its relative proximity to San Diego and Los Angeles. On the East Coast, Loudoun County, Virginia, near Washington, DC, saw its population triple between 1990 and 2006.[citation needed]
Real estate market correction of 2006–2007 resulted in reversal of these trends.[citation needed] As of August 2007, D.R.Horton's and Pulte Corp's shares were down to 1/3 of their respective peaks, as new residential home sales fall. Some cities and regions that experienced fastest growth during 2000–2005 began to show high foreclosure rates.[148] Weakness in housing industry and loss of mortgage equity withdrawal driven consumption could lead to a recession, but as of mid-2007 this recession was not ascertained.[157] In March 2008, Thomson Financial reported that the "Chicago Federal Reserve Bank's National Activity Index for February sent a signal that a recession [had] probably begun...

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