“Today’s program examines changes a decade after the crash. Mike, it’s now been a decade since the financial crash that led to the Great Recession. Most economists agree it was first excessive lending, and then a plunge in housing prices that set the economy up for the big pullback. How does the housing market look today compared to 10 years ago?”
“The housing market is definitely stronger, but it is smaller. It is to say that the financial aspects of the housing market, much, much better than 10 years ago, but there’s simply less activity. Now let me go into some detail.”
“Home prices now have fully recovered from their 40 percent plunge during the Great Recession. So that’s obviously good news for people who own homes. It’s some motivation for people to buy homes because they now, perhaps, can be assured the price will go up.”
“Now people are buying homes, but they’re not buying them like they did a decade ago. The rate of home buying definitely has slowed. Now some economists say that’s good because we were actually in a frenzied pace a decade ago, and also they look at long term trends and say the pace of home buying now is actually back to normal. It was unusually high a decade ago.”
“Home buyers are now older. They have better credit ratings, and they stay in their homes longer. Fewer home buyers are first time buyers. In terms of lending, fewer mortgages are being made, but mortgage interest rates are much, much lower even though they’ve gone up a little bit, than they were a decade ago.”
“Perhaps the best summary statistic though is the homeownership rate. A decade ago almost 70 percent, 70 percent of American households, owned a home. Today, it is 64 percent, the lowest in 20 years.”
Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.