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In 2008, the housing industry was spiraling out of control in the wake of the financial crisis that led to the Great Recession. For me, it doesn’t feel like very long ago that US housing prices were down 30% or more from their peaks, and more than 20% of homeowners were underwater on their mortgages.
But what a difference a bull market makes! Fast-forward to 2019, and we know the housing market didn’t just rebound; it looked stronger than ever last year. Although some feared it would only take one triggering event to derail the market again, in 2020 we’ve seen that even a global pandemic that caused havoc elsewhere in the economy didn’t put a dent in residential real estate.
In fact, life with COVID-19 on the loose has only accelerated the growth of the US housing market.
Purchases of both new and previously-owned homes recorded their strongest pace since December 2006 (which was the peak before the housing crisis). US home values are 28% above the peak set in April 2007 during the housing bubble, and currently stand 63% above their lows in May 2011.
If you are one of the many Americans wondering what to make of the real estate market today — or are thinking about buying into it — here are my pointers for you.
The housing market during the Great Recession, in my opinion, was a once-in-a-lifetime kind of landscape. The likelihood that housing prices will fall more than 30% from their highs is about the same as CD interest rates rising back to