My, my, how things have changed in a decade.
If you compare today’s real estate industry to 10 years ago, you’ll find notable differences. So, let’s take a look at the major changes that took place in the real estate industry over the past several years.
Economy and Employment Are Stronger
The story of the past decade’s global economy cannot be told without addressing “The Great Recession.” The global financial crisis and the dramatic decline in economic activity from 2007-2009 is marked as the largest economic downturn since The Great Depression. Whatever the causes of the Great Recession may have been, the real estate industry was deeply troubled.
The Great Recession, like any previous economic crisis, had brought about a sharp increase in unemployment, along with a severe housing crisis. This chaotic combination of unemployment and the housing crisis made it extremely difficult for an increasing number of households to make mortgage payments. Additionally, the tumultuous union of weakened household budgets and negative equity rendered many homeowners helpless. Since they couldn’t either sell their house to pay off their loan balance or make monthly payments, they had to back out on their mortgages.
Then, we have 2012. Back then, the outlook for the global economy was clear, but it wasn’t pretty. There was recession in the eurozone, the US economy was on a downward trajectory and China faced a slowdown. Against the continuous crisis condition in the global labor market and deterioration in economic activity, the outlook for global job creation worsened, resulting in an unemployment rate of 6.1 %.
Eventually, as the years went by, fears over economic risks faded and financial volatility fell. In 2021, for example, the global unemployment rate had decreased by 0.7 %. Though the global pandemic led to unprecedented disruptions in productivity, supply and demand, which had cataclysmic implications on the global economy and created trade tensions between countries, global growth is projected to rebound to 3.1 % in 2024.
Needless to say, an increase in employment is the combined result of economic growth, which can result in a booming housing market.
New Seasons
Historically, there was a season to buy and a season to sell, but seasonality is no longer driving sellers’ and buyers’ decisions like it used to.
Previously, spring used to be the peak home selling season. Since it falls from March to May, spring is a great time for people to be outdoors. When the weather is nice and people are out, sellers’ have better chances of finding buyers quickly. However, today sellers are looking at the bigger picture and focusing more on market conditions.
Do you think nobody buys a home during winter? Wrong! If you check the numbers, you’ll find that an increasing number of home purchases happened during the coldest months of the year.
A Change in Mindset
Years ago, in America, it was a common belief that homeownership could lay the cornerstone to prosperity. However, things have changed and the younger generations are less likely to buy a home and settle down. While the American dream of homeownership is still pretty much alive today, several studies have revealed that people now tend to prioritize college, career and self-care above owning a home. Even if they don’t have student loans to deal with, most Gen Zers and millennials don’t want to invest in buying houses.
Even those who believe that homes are the locus of family life and pride are thinking through things carefully. “I think buyers have become more discerning. They want to ensure their homeownership experience is successful and sustainable,” says realtor Jeff Thornton of the Thornton Realty Team.
Real Estate Agents Get Reviewed
The internet has dramatically changed our ability to think. Today, there are reviews for everything online and these reviews shape our viewpoint. In the past, real estate agents had to rely on word of mouth, but today, they get reviewed like everything else on the net.
