When it comes to describing the lasting impact of the 2008 financial crisis, I need to first share a little bit of my own backstory.
You see, I got into real estate back in 2004. Over the next three years, I made millions of dollars’ worth of commission and bought and sold 31 properties for myself. By the time I was 27, though, I lost it all and was facing bankruptcy.
My story isn’t unique, either—everyone was impacted (mostly negatively) in some way by the 2008 financial crisis, and its effects are still being felt today in three specific ways.
First, according to the U.S. Census, homeownership declined by 5% during the Great Recession, and it still hasn’t recovered. That’s roughly 17 million Americans who were homeowners beforehand but now aren’t.
"As that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership."
Second, homebuyers who bought after the crash did so cheaply and with low interest rates, which means they have little debt and a lot of equity. In other words, there’s a huge amount of homes out there that are cash cows for whoever owns them.
Third, sellers and lenders are more educated than they were before. Lenders aren’t lending money to people who can’t afford a home, and most sellers won’t sell to buyers who aren’t qualified to buy. More importantly, sellers aren’t as aspirational as they were pre-2008. They pay attention to the data instead of trying to hit a random number.
The 2008 crash defined my generation and reset the market to the point where, more than a decade later, we’re still just approaching the levels we saw during that time period. This is a good thing because, as that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership. This will cause prices to increase, but homeownership will be available to more people in a sustainable way.
If you have any questions about how macroeconomic trends affect homeownership, don’t hesitate to reach out to me. I’d love to speak with you.