Before the financial Armageddon in 2008, there seemed to be two accepted truisms. The first was that real estate would always appreciate. The second was that inflation and the nation’s debt were the biggest threats to the economy.
With the former, although real estate has come back from the abyss and some very select markets have actually eclipsed their previous peaks, it’s painfully obvious this is not your father’s real estate market. It was so bad through the first years of the great recession that if it weren’t for investors scooping up multiple distressed properties or individuals buying in short sales, there pretty much wouldn’t have been any real estate market.
Roughly a few years back the bottom seemed to have been established and then appreciation actually began. This realization, in time, fueled double-digit jumps in many markets. For a moment there was the sense that real estate was back to what had been considered normal. Surely more and more people would begin to buy and prices would continue to increase as most markets were still well off their highs from what was now a decade ago. But something had changed in these ten years and the real estate comeback has dramatically slowed. What’s changed, in part, is what hasn’t changed: income. Excluding the wealthiest Americans, most people’s income has stagnated.
What’s also changed is anecdotal in nature. It seems Americans’ love affair with owning their own home has lost the fire in the belly. Which is too bad. Owning a home with payments you can afford makes so much more sense than renting. Yes, I realize people lose jobs and/or have to move and there may or may not be a market for their homes if and when this time comes. But all financial moves have risks. In this case, which has the greatest risk? Paying rent with nothing to show at the end for all the money paid out? Or owning and having payments reduce the principal balance and be tax deductible while likely having the home appreciate over time?
The second commonly accepted truism pre-2008 was that inflation and the nation’s debt would be catastrophic for the economy unlike anything else. Ironically, this is still believed and preached by many politicians, business media and Wall Street types even though the exact opposite has materialized. For a good five years now, according to this group, a day has not gone by where the sky hasn’t been about to fall. It has become so extreme that at one point the food stamp program came under fire for being a major cause of our economic woes. That’s right. A program that feeds the poor and helps numerous businesses’ bottom line is a very bad thing.
With the austerity group, and they’re living very comfortably