Guess What? What Goes Down Must Come Up

Last time the stock market hit the major skids (the big crash of October 1987), there was an abundant supply of bank-owned properties, also known as REOs (real-estate owned) in the aftermath. I remember a big push for auctioning properties, and home prices dropped dramatically as the nation sank into a recession.

There also were many attempts at short sales, which is usually a vain attempt at trying to get the ace-card holding bank, the desperate delinquent homeowner, and the salivating buyer to come to an agreement on price. This type of three-party settlement rarely happened then, and it is not happening all that much now, either.

But a curious thing began to happen when all the money withdrawn from stock market accounts began to flood financial institutions.  Banks had money to lend, and investors looked for safe havens to park their money for the longer term. They bought real estate, that “you can touch it, feel it” type of solid investment that doesn’t go away because it is a REAL asset. Pretty soon the mantra was “A home is an investment you can live in,” and pulling out of that recession took several years instead of decades.

Today we face recessionary times, according to the National Association of Realtors’ Chief Economist Lawrence Yun.  There will be even more belt tightening, some additional unemployment figures, and a slow recovery beginning in mid-2009 he says. Leading us out of the darkness will be continued home affordability, which always brings the economy back.

“Measures such as the recently enacted first-time homebuyer tax credit and a larger number of mortgage loans that qualify for purchase by Fannie Mae and Freddie Mac and through the FHA program will further bring homebuyers to the marketplace,” Yun forecasts.

What all this means is that real estate, which got us into this mess, will also pull us out. How cool is that?

If you have a question about Sylmar Real Estate, please contact me at 818-970-1286 or via email at

1 Comment

Filed under real estate, Real estate Market, Sylmar

One response to “Guess What? What Goes Down Must Come Up

  1. That’s true, everything will eventually go back to normal. But we love immediate results, and I can’t see it coming back up for quite a while.

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