Before the real estate bubble burst, a home was more than just a home – it was an investment.
- For the past 50 years, homeowners have seen huge profits as their homes went up in value every year. It was relatively easy to buy low and sell high, so there was more money moving around in the housing market and the economy as a whole.
- No more. Some experts predict that home values will now increase only by the rate of inflation – nowhere near the 10% increase many homeowners had been expecting every year.
- Buying a home is now more of a risk than a definite reward. But not everyone has a dismal view. Housing is a necessary part of life, and in areas where there is a limited number of options, prices will have to keep up with demand.
Facts & Figures
- Home sales are expected to have declined by 20% since last July.
- $6 trillion in housing-related assets has been lost since 2005.
- It will take at least 20 years for those losses to be regained, though it’s possible they never will.
Best Quote
“There is no iron law that real estate must appreciate.” – Stan Humphries, Chief Economist for Zillow (a real estate website)