Between 2008 and 2012, more than six million people lost their homes to foreclosure, property values lost almost 40%, and non-distressed home sales fell to all-time lows. It was, without question, the worst real estate market since the great depression. Not surprisingly, the historic dip in the market was followed by a decade-long bull market, the likes of which we have never seen before. Residential real estate is a cyclical market. The strength or weakness of the market is tied to interest rates, affordability, and consumer sentiment. Feast or famine is a fair way to characterize the industry. The cycles are difficult to predict, but one thing is all but certain: the rebound is usually proportional to the dip. The opposite is also true. We’ve had a long run upward, so we should be prepared for a substantial downturn.
