The housing market is a roller coaster. It’s been on a wild ride since its origin, and it doesn’t look like it will be slowing down anytime soon.
According to a report by Real Capital Analytics (RCA), the industry contributed more than $2.7 trillion to the U.S. economy in 2016 and employed 6 million people nationwide (3% of all workers). According to another report by Real Capital Analytics (RCA), the size of the professionally managed global real estate investment market increased from $9.6 trillion in 2019 to $10.5 trillion in 2020, according to a report by Real Capital Analytics (RCA).
This represented an increase of 8% over 2018’s total and was driven by strong investor demand for core assets, particularly those located in gateway cities. In addition, investors are increasingly looking at secondary markets as opportunities arise due to supply constraints and limited development activity.
The National Housing Act, passed in 1934 to strengthen the residential real estate market, created the Federal Housing Administration (FHA). FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. It also allows for more people to purchase homes because it makes mortgages more affordable and accessible.
Soon after, the real estate industry managed to grow exponentially. The only dip it saw was in 2008. Home prices in Southern California fell 35% from their peak and have continued to fall since then. This was the largest drop in home values that the industry had ever seen. It was also the reason why many people quickly sold their homes because they feared foreclosure or bankruptcy.
COVID-19 crushed real estate in 2020, shuttering businesses. The industry is still recovering from the shock of this. But it’s recovering at a good pace and coming back to where it peaked. Reports emerged in recent months saying that we might see more hikes in the real estate market soon.
To learn more about the real estate market, visit Prudential Cal’s blog section.