The Recovery of the Real Estate Market Over the Past 8 Years

The United States housing crash in 2008 affected more than half of the U.S. states. Housing prices were highest in early 2006 and started to decline by the end of the year. In 2008, housing prices in the U.S. declined completely and this was the time when the country’s real estate bubble busted resulting to credit crisis. This caused the 2007-2008 recession in the U.S. and the government had to come in to save the country’s economy. The USA government bailed out many homeowners who were unable to pay their mortgage debts to save the housing market. It is worth noting that the real estate recovery journey has not been an easy one until 2014 when the market experienced some stability.

Consequences of Real Estate Market Crash

The truth of the matter is that this wild rise and fall of real estate prices in the USA over the last 10 years has caused severe consequences to the country’s real estate investors. When the real estate prices went up in 2006, there was crisis among homeowners because paying mortgage debts was a problem. Homeowners could no longer keep up with the mortgage payments; foreclosures dominoed and the crash took its toll. Prices fell and that is when many rich investors bought in to the market. Buying more houses cheaply hoping to sell them later at a profit. The Government also intervened hoping to stop the bleeding.

Since the beginning of the recovery of the housing sector in the U.S., the real estate has become pricier with about 10 percent year after year according to Chase-Shiller home price index. Consequently, very few people are willing to sell their homes because they believe prices are likely to go higher in the near future. Those willing to sell their property are asking for very high prices, which is frustrating to first-time homebuyers. Banks are less willing to lend money to first-time homebuyers and those willing are asking for strict requirements and high interest rates.

Although the housing market has shown some positive progress since the beginning of the recovery process, the housing market has not settled to where it was before the 2008 real estate crash. However, the rapid increase of real estate prices witnessed in 2012 and 2013 is slowing down gradually. Normally, home prices are supposed to appreciate slightly faster than inflation and with the current trend in the USA real estate, the market is expected to settle into that pattern once more.

For instance, home prices are gradually declining in the recent past on a month-over-month basis although home prices increased by double digit in the last two years. The good thing is that home prices have stopped to increase at an alarming rate and eventually valuations will begin leveling off. It is also worth noting that prices for non-seasonally adjusted real estate remained constant during the winter of 2014 throughout the country. In some parts of the country such as Midwest, prices even went down. This is a clear indication that real estate market in the USA is now on the right track.

real estate market recovery

It is now evident that the past trend when rich investors in the US would buy every single family home they come across so that they can sell later at a higher price could be ending. Although, real estate is appreciating, the trend is normal just like it is in other countries. Therefore, it will be possible for average investors in the U.S. to buy homes in the near future because prices will be relatively affordable.

There are indications since 2015 that U.S. real estate is positively responding to the price increases of the past decade. More houses are available for sale and house builders have constructed more homes in the past five years. In 2012, there was about 8.4 percent increase in inventory and the number is increasing gradually. Additionally, homeowners and banks have realized that the property they own are unlikely to increase in value as it was in the past two years despite the prevailing economic situations in the country.

Generally, real estate in the USA has shown signs of full recovery and it appears as if the supply and demand will eventually balance out. Initially, it was hectic to buy or sell a home in the USA but taking in to account the 2014 indications, it will be less stressing to buy or sell a home by the end of 2016 because the market will have stabilized. Cases of sporadic real estate valuations changes within a short period will no longer be as present in the coming years. At least for now, price trends seem to suggest more stable growth in the coming years.

 

 

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