10 Years After the Crash, the Boom Times Are Back in Real Estate—but Way Different
By Cicely Wedgeworth | Nov 13, 2017
As anniversaries go, it's a nerve-racking but inescapable one: It's been 10 long years since the widespread real estate crash that precipitated the Great Recession, and all the misery that followed in its wake. So it seems like the perfect time to take a giant step back, peruse and analyze all of the data, and assess what has really happened to the American housing market in the decade since.
So where are we, really?
Ever-steeper home prices: check. Buyers clamoring to get into those precious homes: check. Real estate newbies scooping up homes to renovate quickly and sell for a profit (i.e., flip): check. On first or second glance, things are looking awfully similar to the real estate boom that preceded the epic bust. But wait: There's no need to start stuffing your life savings under your mattress for safekeeping just yet. If you look beneath the surface, there are key differences between then and now, a realtor.com® analysis of housing and economic data shows.
“As we compare today’s market dynamics to those of a decade ago, it’s important to remember rising prices didn’t cause the housing crash,” said Danielle Hale, chief economist for realtor.com®. “It was rising prices stoked by subprime and low-documentation mortgages, as well as people looking for short-term gains—versus today’s truer market vitality—that created the environment for the crash.”
By contrast, today’s housing market is characterized by a significant mismatch between significant job and household growth (the factors that spur people to buy homes) and much tighter lending standards and historically low for-sale inventory (the factors that make it difficult for people to buy new homes). The result: extremely high home prices and a lot of frustrated buyers. (Did you hear about the Northern California home that sold for $782,000 over asking?)