THE PAST DECADE: The real estate boom and bust were the biggest since the Great Depression.
With interest rates at near-historic lows, home sales this decade skyrocketed, propelling homeownership rates and new construction to all-time highs. Lending standards sank through the floor. People bought homes with little or no down payment, and in many cases without proof of income or assets. Homeowners refinanced and raided their equity. Home prices soared 88 percent between the first quarter of 2000 and the peak in the first quarter of 2006. Then, the crash.
Homes languished unsold and millions of Americans went into foreclosure. Housing construction tumbled to the lowest level in 50 years. Home values plunged, eviscerating $4 trillion in home equity. By mid-2009, home prices were down 30 percent — even further in parts of California, Nevada, Florida and other markets where prices soared highest.
THE NEXT DECADE: It could be another five or 10 years before homes in the hardest-hit markets regain the value they had at the height of the housing boom.
What else will shape the housing market in the next decade? One of the biggest questions is how the government will extricate itself from control of Fannie Mae and Freddie Mac. The two companies, which were on the brink of failure in the fall of 2008 and seized by the government, own or guarantee about half of all home mortgages. Another wild card is the FHA, which now insures one in four new loans. Rising foreclosures have eroded the agency’s financial cushion below the safety line. Will it need a taxpayer bailout?
What do you think?