US Housing Market Posts $2.3 Trillion Drop, Biggest Since 2008 (2024)

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US Housing Market Posts $2.3 Trillion Drop, Biggest Since 2008? ›

After peaking at $47.7 trillion in June, the total value of US homes declined by $2.3 trillion, or 4.9%, in the second half of 2022, according to real estate brokerage Redfin. That's the largest drop in percentage terms since the 2008 housing crisis, when home values slumped by 5.8% from June to December.

Total home values fell to $45.3 trillion at the end of 2022, down 4.9% from the same period a year earlier, Redfin found. By comparison, home values dropped 5.8% from June to December during the 2008 housing market crash, according to Bloomberg.

The housing market collapse of 2008 was caused by a number of factors, including subprime mortgages, predatory lending practices, and securitization by lenders. The housing market collapse of 2008 had a devastating impact on the global economy. Millions of people lost their jobs, and many businesses went bankrupt.

That's apparently the motto of the current U.S. housing market, which, after a wildly prosperous peak-pandemic run, is now seeing values plummet. Homeowners across the country have collectively lost $2.3 trillion in home value since the figure peaked in June 2022, according to a report from Redfin.

Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011. On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history.

9, 2007 -- but by September 2008, the major stock indexes had lost almost 20% of their value. The Dow didn't reach its lowest point, which was 54% below its peak, until March 6, 2009. It then took four years for the Dow to fully recover from the crash.

The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions losing their jobs and many businesses going bankrupt.

The Great Depression of 1929–39

Encyclopædia Britannica, Inc. This was the worst financial and economic disaster of the 20th century. Many believe that the Great Depression was triggered by the Wall Street crash of 1929 and later exacerbated by the poor policy decisions of the U.S. government.

The subprime mortgage crisis was triggered by risky lending practices. When interest rates froze and the housing bubble began to collapse, borrowers couldn't afford their payments. As massive foreclosures ensued, the fallout spread to the global financial system.

One group that profited from the 2008 financial crisis was large banks and financial institutions . These institutions were able to take advantage of the crisis by receiving government bailouts and acquiring struggling banks and assets at discounted prices .

Will the housing market ever crash again like 2008? ›

Mortgage rates are high, but home prices keep rising — blame the lack of housing supply. Economists predict that any market correction will be modest and not on the scale of the Great Recession. Experts do not expect a housing market crash, due to low inventory, strict lending standards and other factors.

One trillion equals a thousand billions, or million millions. 1 trillion consists of 1 followed by 12 zeros, that is, 1, 000, 000,000, 000 and can be written as \(10^{12} \) (ten to the twelfth power). It takes about 32,000 years to finish 1 trillion seconds.

After falling 33 percent during the recession, housing prices have returned to peak levels, growing 51 percent since hitting the bottom of the market. The average house price is now 1 percent higher than it was at the peak in 2006, and the average annual equity gain was $14,888 in the third quarter of 2017.

When baby boomers were buying their first homes in the 1970s and 1980s, it wasn't unusual to take on a double-digit interest rate on a 30-year mortgage. And yet, buying a home still felt within reach for many. Today, rates are lower but home values have skyrocketed.

Buying a home this year, particularly in early 2024, might mean you're able to beat the rush, as the market could get more crowded if or when rates drop further. Waiting, however, could give you more options to choose from as supply improves, along with the potential for increased mortgage affordability.

An overwhelming majority of homes in the U.S. are overvalued as steep mortgage rates and an ongoing housing shortage push the price of real estate even higher. A new report published by Fitch Ratings found that homes were overvalued by 11.1% at the end of 2023, a trend occurring in about 90% of U.S. metro areas.

After falling 33 percent during the recession, housing prices have returned to peak levels, growing 51 percent since hitting the bottom of the market. The average house price is now 1 percent higher than it was at the peak in 2006, and the average annual equity gain was $14,888 in the third quarter of 2017.

Mortgage rates are high, but home prices keep rising — blame the lack of housing supply. Economists predict that any market correction will be modest and not on the scale of the Great Recession. Experts do not expect a housing market crash, due to low inventory, strict lending standards and other factors.

A McKinsey Global Institute report estimates that the housing shortage is costing the California economy between 143 and 233 billion dollars per year, from lost construction activity (at least $85 billion annually), lower consumption of consumer goods because of high housing costs (at least $53 billion annually) and ...

The collapse of the housing market during the Great Recession displaced close to 10 million Americans as rising unemployment led to mass foreclosures. 1 In 2008 alone, 3.1 million Americans filed for foreclosure, which at the time was one in every 54 homes, according to CNN Money.