In 2008, the U.S. housing market “bubble” burst. Essentially, the housing market had become overinflated and then rapidly crashed. The bursting of the market’s bubble was caused by a host of significant factors, including the following:
The subprime mortgage crisis
Rapidly falling home prices
High levels of debt among homeowners
Inadequate regulation of the financial sector of the economy
The housing market ultimately crashed because all of these factors dramatically impacted buyers, sellers, and developers all at once. When the market is affected by negative forces on a less intense – and perhaps less numerous – basis, a real estate market correction may occur.
Corrections vs. Crashes
One of the primary reasons why the U.S. does not experience real estate crashes often is that so-called “correction markets” help to redirect market conditions that – if left utterly unchecked – could lead to a bubble at risk of bursting and/or a crash. Correction markets specifically allow pricing trends that have dipped too low or soared too high to normalize.
Most of the time, correction markets play out gradually, not suddenly as crashes do. Additionally, while a crash is more likely to affect the entire nation’s housing market, correction markets may influence pricing conditions broadly, locally, or even on a single street.
Finally, whereas crashes tend to result in plummeting prices and sales activity, corrections help to stabilize supply and demand, usually by a drop in home sales followed by a relatively organic period of slower home sales – during which homes tend to remain on the market longer than they had before the correction drop occurred – before activity and pricing rebound to more standardized rates.
Speak with a Knowledgeable Lake County, IL Real Estate Lawyer Today
There is no perfect time to purchase a home. Yet, if your family needs to make a switch while correction market conditions are playing out, know that there are things you can do to better safeguard your interests as you move forward. Connecting with the experienced North Chicago, IL real estate lawyers at Newland & Newland, LLP can empower you to do what you need to do for your family while better ensuring that you are not taken advantage of as the market evolves.
To learn more, consider calling the firm directly at 847-549-0000 or submitting your contact information on the firm’s website to schedule a risk-free case evaluation at no cost. Our team looks forward to meeting with you.