Weathering Changes in the Market: Lessons from Past Recessions
Real estate markets shift constantly, and weathering changes in the market requires adaptability, knowledge, and preparation. In this episode, we explore past recessions and their impact on real estate, learning valuable insights from industry veteran Connie Kyle, who has worked through multiple market downturns over her 44-year career.
Lessons from the 1980s Real Estate Market
The early 1980s saw interest rates climb to 17.5% as the government tightened money supply to curb inflation. During this time, realtors had to master creative financing, such as discount points and loan assumptions, to help buyers afford homes. Foreclosures dominated the market, with banks owning nearly 35% of the inventory. Yet, despite economic downturns, real estate transactions never stopped—people continued to buy and sell homes.
The 2007-2010 Great Recession and Market Adjustments
The Great Recession, triggered by the subprime mortgage crisis, caused widespread foreclosures and short sales. In some areas, home prices dropped drastically, and realtors had to navigate complex transactions with lenders. Short sales often took months, if not years, to close, making them a challenging but necessary aspect of the market.
The COVID-19 Recession and Unpredictable Market Trends
Unlike previous recessions, the COVID-19 crisis shut down the economy almost overnight. Many feared the real estate market would stall, but instead, demand surged. Low interest rates and changing buyer priorities led to record-breaking home sales. Inventory remained low, not due to a lack of listings but because of increased demand, making it one of the most competitive markets in history.
Preparing for Future Market Shifts
While no one can predict exactly how the market will shift next, weathering changes in the market requires financial preparedness and adaptability. Agents should focus on saving during prosperous times, reducing debt, and staying educated on market trends. Buyers and sellers must understand changing conditions and work with knowledgeable professionals to navigate uncertainties.
Despite economic fluctuations, one constant remains: real estate transactions will always occur. Success in the industry depends on preparation, adaptability, and a long-term perspective.
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