Looking in to our crystal ball there is nothing that is constant in this world. Our leaders change, philosophies are altered and our vision for the future is never static. Looking into our past can give us a glimpse of the evolving nature of human thought.
This belief is also relevant to the real estate market place. Look at the past decades and consider how we view the concept of home ownership, mortgages and interest rates. During the 1980’s the economy was rapidly growing, consumers were confident in there ability to repay mortgages even though by today’s standard mortgage rates were quite high.
Travel forward in time to the early 1990’s and the real estate market has drastically changed in North America. Rapid inflation and soaring interest rates are at the topic of choice in there Real Estate marketplace. The optimism the 80’s seems to have blown away like a chilly fall breeze leaving only the faintest memory of those warm summer days.
Double digit interest rates caused many homeowners to loose there home’s. There seemed to be a fear of reprisals from financers on all sides and rates didn’t appear to soften until near the end of the decade.
Heading into the new millennium we were met with a new optimism in the housing market. As we a have progressed through 2/3’s of this decade we have seen huge improvements in the housing marketplace. We have seen a rapid deflation of interest rates.
Lenders have created new lending packages to make homeownership more accessible for first time home buyers. Longer amortization periods, sub-prime interest rates, flexible repayment schedules and lower down-payments created an atmosphere that fostered the belief that everyone is capable of being a homeowner.
With this new found optimism home prices began to soar, in some locations homes became completely out of reach for new buyers that these new lending packages were designed to benefit. Sellers began to adjust to the new activity and home prices reflected the heightened activity in the market.
As we look at the present day we can look back retrospectively at the past few decades and note the series of highs and lows the have occurred in the marketplace. Unlike the major shifts we have seen in the Real Estate marketplace in the past 30 years the current market shift for the most part seems to be less volatile and dramatic than in the past.
Interest rates remain lower and seem to be relatively stable. Certain markets have collapsed under the pressure created by rapidly soaring housing prices, but for the most part the North American market has stabilized with both pricing and buyer activity. What the future will bring is anybodies guess, but if the past is a reflection then maybe our future is heading into a new and unknown direction.
