The crash of the stock market, the burst of the housing bubble, and the subsequent recovery all account for the last several years of turbulent events that have rocked real estate trends. As the housing market continues to recover, it’s important to look back closely on the real estate trends of the last decade to help us avoid any potential pitfalls in the future—and to truly appreciate the market today.
Before 2008: Declining Home Values, Overwhelmed Consumers
By the time 2006 was over, property values across the country declined to all-time lows. On average, most homes lost 39 percent of their value, especially in depressed suburban areas and impoverished urban centers.
At the same time, consumers who had purchased their properties using a variable rate mortgage could no longer afford their payments because rates began to balloon to amounts they could no longer afford. In many cases, consumers lied on mortgage applications and told banks that they could afford payments that were well beyond their means, while banks rarely checked to see if many of the income statements were actually authentic.
These factors contribute to a great recession that left many Americans without homes, and owing more on houses than what they were actually worth. In turn, the careers of real estate professionals, inspectors, and other homeownership industry workers were in jeopardy.
After 2012: The Housing Market Recovery
After the great recession in 2008, Americans experienced great hardships, including foreclosures, unemployment, and increasing amounts of personal debt.
Fortunately, in 2012, everything started to look up for consumers. Banks had begun to ease lending restrictions and Americans were once again ready to buy homes. Because the recovery was still under way, consumers took advantage of home values that were still way below their pre-2008 numbers.
The market has nearly made a full recovery, with homes in many areas only slightly below their original values. Banks continue to lend money to millennials who are just now entering the housing market looking for their first property—and it is once again a great time to buy a house in the United States.