The Great Recession…have we learned our lesson?
By Josh Teti, Princeton Mortgage Wholesale
Think back 10 years ago to March 2008 (yeah I know, it’s March already?!). I was in college getting pumped for spring break in Florida and not caring too much about what was going on in the world around me. Little did I know that I would eventually have a career in an industry that at that time in 2008, was triggering the Great Recession that would cause American households to lose over $16 trillion in net worth. Not many people outside of the mortgage industry understand the true nature of what actually happened during that time. Plenty of well-produced movies & documentaries (The Big Short, Inside Job, Too Big to Fail …to name a few) outline the events leading up to and after the economic collapse…but here’s a snapshot: in 2009, the unemployment rate hit 10%; in 2010, home foreclosures peaked to almost 2 million; from 2007-2011, housing prices fell 33%. People were jobless, homeless, and lost their pensions & 401(k)s – it was a tough time for our country.
So, in 2011 I thought it was a good idea to start a career in the mortgage industry and looking back, I am so happy that I did. I’ve been able to see a change and shift in an industry so powerful that it can cause the world economy to falter. I’ve seen countless efforts through legislative reform to increase fair-lending practices starting with the Dodd-Frank Act in 2010. I’ve seen companies rise by adapting to the changing environment, and I’ve seen companies fall because they continued to operate under the same methods and principals that fueled the downfall in the first place. Nevertheless, it’s moments like these in our history that we can look back on and understand what actually happened and what we can do to avoid it from happening again…because there is a lot riding on it.
Speaking of looking back, CoreLogic recently published a special report that evaluates the housing market and how it has reacted since the Great Recession. 2006 was the peak year in home prices before the collapse but we’ve rebounded nicely - the average home price is now 1% higher than is was in 2006 growing 51% since it’s low point in 2011. Many experts contribute this to the low unemployment rate which has an impact on increased household income and has motivated increased spending. In 2016, the Fed raised the interest rate by 25 basis points which reflected a strong economy (and I’m sure you’re aware of the proposed Fed hikes estimated for 2018). With all that being said, our industry has come a long way since the dark days and there is data out there to prove it. We must continue to navigate the landscape of our ever-changing environment and stay well-educated & informed to make sure we are bringing value and doing our part to keep the economy strong.
Photo by geralt on Pixabay
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.