Brazil’s innovation ecosystem is evolving quickly.
originally appeared in the May edition of Mobility Magazine.
When asked, “How’s the real estate market?” the traditional
real estate agent’s response is, “Incredible!” For most of this century,
whether it’s “incredibly good” or “incredibly bad,” that response certainly
applies. For many geographies, the average market price graph resembles a scary
roller coaster. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA
Index (in blue on the chart below) gives a good picture of the roller-coaster
effect experienced by most U.S. markets.
The same stats at a regional level lend serious support to
the claim that all real estate is local. People in Las Vegas (red) experienced
significantly higher highs and lower lows and still have not quite recovered,
while those in Dallas (green) are confused as to just what everyone has been
talking about. Truthfully, though, more markets shared the national trend line
than the gradual increase shown by Dallas. Most markets have now recovered to
above pre-recession levels. On a national basis, the average home price is now
slightly higher than it was at the top of the market in 2006.
The real estate bubble of 2006 had a particularly
detrimental impact on homeowners who purchased during the peak months. As real
estate values declined in the ensuing years, many found themselves underwater
with negative equity—a scenario that exists when the home’s current market
value is less than what is owed on the mortgage. Based on CoreLogic’s equity
data analysis, negative equity reached a peak of 26 percent of mortgaged
residential properties in the fourth quarter of 2009, seriously impacting more
than 12.5 million homeowners.
Many of these homeowners ultimately lost their properties in
foreclosure or simply walked away. For those who stuck it out, the combination
of continued mortgage payments and rising home values has paid dividends. In
the fourth quarter of 2017, the total number of mortgaged residential
properties with negative equity had decreased to 2.5 million homes, or 4.9
percent of all mortgaged properties, and the national aggregate value of
negative equity was approximately $283.1 billion. While much improved, the 2.5
million homes remaining underwater are essentially off the market,
significantly contributing to the lack of available homes we see today.
Despite the millions of homeowners with negative equity,
Americans as a whole are rich in equity, with a total of $14.1 trillion in home
equity at the end of 2017, surpassing the height of the real estate bubble of
2006. This bodes well for the economy, as more and more homeowners feel secure
enough to invest and make other purchases.
Despite the dramatic ups and downs of the real estate market
in the 21st century, homeownership remains the American dream. In Hearth’s “2017 State of the
American Dream Report,” survey data indicates that “all
generations—including millennials—agree homeownership is very important to
achieving the American dream.” More specifically in Hearth’s report,
respondents rated “owning a home I love” higher than any other options,
including starting a family and finding a fulfilling career.
Read the rest of this article in this month’s edition of Mobility
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