The housing bubble warnings started two years before the peak. By 2002, Gary Shilling's firm identif

The housing bubble warnings started two years before the peak. By 2002, Gary Shilling's firm identified dangerous patterns emerging in residential real estate markets. Zero down payment loans had become standard. Borrowers assumed perpetual appreciation would let them refinance before making a single payment. "No doc" loans eliminated income verification entirely. These weren't isolated products — they represented the new normal in mortgage lending. The bubble wouldn't burst until 2006-2007, but the structural problems were visible four years earlier. Home prices had already begun their parabolic rise from 2000-2002, gaining 88% nationally before the crash. Shilling's early warning demonstrated that bubbles often build slowly, then accelerate rapidly in their final phase. The Federal Reserve kept rates near 1% from 2003-2004, flooding the system with cheap money. Mortgage originators responded by creating increasingly exotic loan products. By 2005, over 40% of new mortgages required no down payment. The eventual collapse wiped out $6 trillion in housing wealth and triggered the Great Recession. Gary Shilling via Business Insider