What A Difference A Decade Makes
The economy has been growing and expanding for years. As predicted, according to Matthew Gardner, chief economist for Windermere Real Estate, we are due for a recession throughout 2019 and 2020. This is part of the flow, totally normal and expected. Did you know that for every recession we’ve had over the years, housing prices still went up? Well, all except the big one in 2008. This was based on the housing market and everything that went on behind the scenes.
Let’s take a look at what went down and how it’s very different from a normal rise and fall of the economy.
Ten years ago (3rd and 4th quarter of 2008), the country was in financial turmoil. The Subprime Mortgage Crisis had been a challenge since 2006 and the ramifications were beginning to snowball in the third quarter of 2008. Here are a few of the benchmark events that marked the end of 2008:
July 2008 – IndyMac collapses
September 2008 – Fannie Mae and Freddie Mac bankrupt. These two companies had guaranteed 80% of the loans in America. Lehman Brothers bankrupt and the government is bailing out AIG Insurance.
October 2008 – Dow had suffered major losses and the value of US stocks plunge. Mortgage system government bailout: Troubled Assets Relief Program.
December 2008 – US automakers are struggling and receive a bailout. The Federal Reserve set the short-term interest rate to 0% for the first time in history.
And so on. It took until 2009 for us to begin to pull ourselves out and longer than that to recover. Depending on what metrics one looks at, we are still recovering.
I thought it was important to take a look back, note just how stressful that time period was, and compare some of the metrics to where we are today:
Although general buzz does a good job of capitalizing on any source of stress in the housing market, one just has to look at the facts above in order to measure where our market really is. Questions? Please reach out!