While prices were stagnant around 2008. Sales tapered off because sellers did not want to sell. Yes, the short term did have a downturn in prices, but also had more dramatic loss of inventory. People were not selling because of the reduced prices.
The real estate crash of the mid-late 2000's was a lot more messy than that, thanks to all the speculative buying and building that was taking place. The crash wrecked the global economy.
I still remember 2000's era national TV commercials from sketchy lenders trying to sucker people into getting adjustable rate mortgages. I can't remember the name of the company (Countrywide maybe), but there was this one commercial where this housewife berates her husband like he's some kind of idiot for being hesitant about getting on the hook for a home they can't really afford.
"We can do this" is the catch phrase she uses when the poor sap finally gives in.
There were big residential developments way out on the fringes of major metros like DC that were left vacant. Some developments didn't even finish construction and were eventually bulldozed. Personal bankruptcies soared. Others who couldn't file for bankruptcy simply
walked away from their homes and mortgages. Soaring gasoline prices combined with ARM notes hitting their adjustment phases left a bunch of buyers flat broke. What could the bank do with these broke people?
Throw them in debtors prison? They had no alternative than just be stuck with the bad notes. Some of this was the fault of banks for having such stupidly low lending standards, even fraudulently low considering how low income minorities were targeted in the final phase of the mezzo-scale Ponzi scheme with a good bit of
reverse red-lining.The US Government is the only thing that put a floor under declining property values in that crash. They came in and bailed out the banks for all their bad loans. Had the government not stepped in many large institutional lenders would have been left insolvent. The lenders deserved to be severely punished for what they did. Unfortunately if they were left to fail it would have shut off business cash flow operations for much of the nation. That would have pushed us into Great Depression 2.0.
Outside the great depression, there have not been long term price reductions (or corrections) on properties. This also said, supply and demand set the sales volume, not the price. Supply and demand in real estate is a function of price. As the price increases supply will increase. As prices decrease (or fail to increase sufficiently) supply will retreat.
The real estate market functions just as much on a specific local basis as it does on any kind of national scale. The notion that property, such as homes or land, do not lose value
is a MYTH. The Great Recession is an example of runaway excess on a national scale.
Local markets can hit downturns just as severe
if not worse. All it takes is a major employer in a modest sized town closing shop for good. Here in Lawton if the Goodyear plant (one of the largest tire factories in the world, if not the largest) were to shut down our local real estate market would be plunged into a severe downturn. The nearby town of Cache would devastated. There isn't a lot of other Goodyear-equivalent jobs in this area for blue-collar workers. Many employees would just leave the area. This happened in a big way to cities in the so-called "rust belt." Lots of small towns in Oklahoma seeing population decline. Young people are leaving and older residents are dying off. Meanwhile the old homes are just left sitting there, often falling into disrepair.
The current real estate market in the US is nothing short of absurd. Median home prices in many cities do not at all reflect average income. Investors both domestic and international are artificially propping up high prices by buying up properties as investment assets. These pricing conditions are NOT sustainable. They're really not going to be sustainable over the long term due to how badly ordinary people are being price squeezed.
Not many young adults are buying up these McMansions out in the suburbs and exhurbs. The buyers are mostly middle aged or retiring people. What are those older buyers of big homes going to do 20 years from now when they (or their estates) want to sell but there are hardly any buyers? The United States has all the conditions in place for our nation's birth rate to crash down much worse than it's already doing. Our long term economy depends a great deal on enough new Americans being born to keep the system running. The
American Dream of a wife, nice house and a couple kids costs a shit ton of money. Lots of young adults are being priced out of that convention of living. Some are even happy to opt out of that and stay single and child-less. There are many thousands of square miles worth of "R1" zoned housing that may be really tough to sell a generation from now.
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Topic: North Houston Highway Improvement Project (project partially halted by FHWA) (Read 96307 times)