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What History Tells Us About the Future of Real Estate

As the saying goes, history tends to repeat itself. In the world of real estate, this can be a valuable lesson for anyone looking to buy or sell property. By looking at past trends and their impacts on the market, we can make educated predictions about what the future might hold.

In a recent article from Inman News titled "Will spring be a bust? 4 decades of housing data tell a complex story" by Jim Dalrymple, we can see how historical data can help us understand current real estate trends. In this post, we will be exploring some of the key takeaways from the article and how they can inform our understanding of the current market.

Slide one looks at historical inflation rates, showing that inflation skyrocketed in the 1970s and 1980s due to multiple energy crises. During these times, wages struggled to keep up with price hikes. It's important to note that these inflationary periods were much more extreme than what we are experiencing today. However, we can still learn from the impact that inflation had on the market during these times.


Slide two explores historical interest rates, which soared to over 18% in the late '70s and early '80s to combat inflation. We are seeing just over a 6% inflation rate and a 6% interest rate, which are less extreme, considering the 14% inflation and 18% interest rates of the ‘80s, but still essential to consider. The resulting impact on the market may be similar to what we've seen in the past but less severe.


Slide three examines historical home prices and shows us that the only significant drop in prices in our history came as a result of the 2008 market crash. However, this crash was caused by faulty lending practices that are now illegal. It's important to note that we are not currently in the same situation as in 2008. Foreclosure rates are at a historic low of 1%, which means a collapse like 2008 is not likely.


Looking at the rest of the historical sales indicators, we can see that hyperinflation leads to a flattening of home prices with a possible regional drop, followed shortly after by a return to typical increases. Here in Nashville, we continue to see prices go up, and we continue to see sales occur. Our economy continues to outpace the national average.

Slide four shows the impact of inflation on annual unit sales, which typically results in fewer homes sold. This trend started last year and will likely continue into this year. We can expect fewer homes sold and a flattening of pricing followed by an increase.


In conclusion, it's an excellent time to buy if you've considered it. The available data suggest that the doom and gloomers are wrong, and if you wait, you'll only pay more and face more competition. While past trends can inform our predictions, it's important to remember that the future may be uncertain, but we can utilize these trends to make better predictions.

Article by: Jared Benoit


Images and supporting data from:

Dalrymple II, J. (2023, March 27). Will spring be a bust? 4 decades of data tell a complex tale. Inman. Retrieved March 28, 2023, from https://www.inman.com/2023/03/28/will-spring-be-a-bust-4-decades-of-housing-data-tell-a-complex-story/?utm_source=dailyheadlines&utm_medium=email&utm_campaign=localnewsletter&utm_content=966761_dek_1_20230328&message_id=30975485.52815

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