Homeownership is undoubtedly one of the biggest goals of many and is often regarded as the American Dream. Before the 1950's less than half of the country owned their home while after World War II many veterans sought the assistance of the GI Bill to buy their first house. Since this time the rate of homeownership has grown to a current level of over 65%. The growth has been steady with the exception of a few years between 2006 and 2008 during the last bust in the market. Seeing that dip in our not too distant past may make many concerned that we may see this dip occur again. To compare then to now, here is a closer look at some differences.Why The Market Crashed ThenBack in 2006 there were many foreclosures in the market that drove home values down tremendously. What happened was many buyers were not exactly qualified for the mortgages that they were approved for. Also, many homeowners cashed in on a significant amount of equity on their homes. When prices had dropped they found themselves upside down where they walked away from their homes. This added even more foreclosures to the market resulting in lower neighborhood home values. Why The Market is Different TodayToday's real estate market is different for two main reasons. For one, demand for housing is actually real. Back in 2006 banks would create demand by lowering lending standards so that a larger pool of buyers could qualify for homes that normally would not. Today's buyers as well as those refinancing are facing much stricter qualifications than back then. So by contrast today the demand for homeownership is real especially where the importance of home has increased in value due to the recent pandemic. Another big reason why today's market is different is that homeowners are not using their homes like they did back then as ATMs. In the early 2000s many were thinking the rise of home prices would not end so they were pulling out equity and buying more homes, cars or other high ticket items. Soon after when prices dropped they found themselves under water leading to foreclosures. These days homeowners have not forgotten what happened then and have learned from it and are not following this same behavior.
