Today I would like to hopefully clear the air a little for all of you with your concerns on the condition of the housing market. As we all know, our country experienced the burst of the housing bubble and a collapse unseen in our countries' history. Now, to many people this has been a very scary and depressing time for a few reasons:
- your home is worth much less than you purchased it for
- lenders are stricter with issuing home loans
- if your home was foreclosed upon, you may be offset by the idea of home ownership
However, there is a positive outlook on this "supposedly" shitty housing market (didn't know I spoke French, huh?). My apologies for the use of profanity, but the word fits the types of attitudes people have been feeling towards the housing market. First off, let me talk about the "ridiculous" stretch from 1995 to 2005 wherein the housing market took off faster than Usain Bolt. Home prices hit record highs and people were making unfeasible profits on their homes from an investment standpoint. Investors flooded the market and started flipping houses, in some instances, the same week they bought it; and still making a profit. This is the condition everyone became used to and considered it the NORM. I capitalized the word NORM for a specific reason, because it was not the norm whatsoever. This decade span of time was an extremely good stretch, but based off of an inevitable failure; over lending. Sure it was nice for everyone to get a loan regardless of their ability to pay it off but realistically that does not work, as we saw with the collapse. Lenders were willing to give out crazy loans because the home prices kept increasing by crazy amounts, but that did not continue forever. So we can come to the conclusion that between the years of 1995 and 2005 we experienced an ABNORMAL housing market. Therefore, let me explain to you what a "normal" housing market looks like. A "normal" housing market is one in which prices remain steady with a constant but small appreciation over time. There should be appreciation in a "normal" housing market, but not insane appreciation in very little time.
It seems that today, we are back on track for a "normal" housing market. If you take a look at my previous posts you will see the statistics that I have talked about and the proof in the numbers. We are seeing appreciation in home prices that are not enormous, yet they are consistant. There needs to be some confidence instilled back in the public in regards to home ownership. Do not just look at our current condition compared to the "abnormal decade" because that decade is an outlier in terms of our overall housing history. Hopefully I was able to put some of your concerns at ease and offer you a perspective that you have not yet thought of.
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