Let’s take you back to 2010. Barack Obama was still president, reality show “Dance Moms” didn’t exist, and Instagram influencers were still in diapers. Oh, how those were the good old days. Things have significantly changed since 2010 and so has the real estate industry. Here are our takeaways from the real estate market over the last decade.
Real Estate Over the Last Decade in a Nutshell
The biggest takeaway from the last decade is that real estate isn’t just for the rich anymore. Thanks to the lowest interest rates we’ve seen in a while, buying and investing in property is suddenly a possibility for people from diverse economic backgrounds.
Investing in real estate can be a lucrative side-hustle, bringing in some extra cash each month.
Does this mean that we can now afford to buy our own Netflix subscription instead of using our mom’s? Asking for a friend.
Lehman Out, Low Rates In
2009 was a rough year for a lot of people. Kanye West interrupted Taylor Swift at the Grammys and financial giant Lehman Brothers filed for bankruptcy.
But later that year, things took a turn for the better when the Federal Government, under the American Recovery and Reinvestment Act of 2009, pumped lots of money into the real estate market. This resulted in a drastic decline in property and interest rates. And a growing number of Americans who were able to invest in real estate for the first time.
Welcome to the Suburbs
For those of us who can recite the Friends theme song by heart (guilty as charged). Moving to NYC has always been the dream. But for most millennials who earn less than $75K (and live with their parents), big cities are no longer affordable. That’s why more and more Americans between the ages of 22–38 are moving to suburban areas on the outskirts of major cities like New York City, Los Angeles, and Atlanta. These areas are significantly cheaper than the cities that they border.
Do you think people in the suburbs use Tinder?
From Trump Towers to the White House
Imagine if we told you in 2010 that the guy from The Apprentice would become President of the United States. Donald Trump may not have had experience with politics (to put it mildly). Before becoming Commander in Chief, but he did spend the bulk of his life in real estate.
To what degree his real-estate background will influence our industry is still unclear. But there has already been some economic changes which are affecting investments. The first, stock market growth.
Up until the Corona crisis, the market was doing pretty well and people weren’t willing to sell their stocks. However, as more and more businesses look for ways to cut financial losses, this may shift in the near future.
Another change that is affecting real-estate holders in largely Democratic states is SALT, the State and Tax Deductions Act, which as of January 2018, caps tax deductions at $10,000. That barely covers the average person’s Real Estate taxes.
What We Can Expect in the Next Decade
Disclaimer: If you’re looking for definite predictions as to what the housing market will look like in 2030, we recommend that you rely on your horoscope or your favorite tarot card reader.
What we do know is that housing in cities like San Francisco, New York and Los Angeles is becoming more and more unaffordable. Millennials today are already spending at least half of their salaries on housing.
You can’t save for the future (i.e your child’s college fund, retirement or your dream beach house) if you’re barely scraping by in the present. This may explain why more and more millenials are opting to live together in shared spaces.
We’ll have to wait and see what’s in store for the next decade. But for now all of us at the MWMfund will be here to help you make the most of your investments.
Have questions about investing with MWMfund? Reach out to us at firstname.lastname@example.org.
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