The 1990s - Recession Reemerges
October 17, 2022
Recession – the dreaded convergence of high unemployment, inflation leading to decreasing home values, and decreasing demand for housing – became reality once again as America entered the 1990s. Demand declined partially because the population growth following World War II ended. Home prices peaked in 1989 and then fell until they bottomed out at the end of the decade. Prices tumbled 14 percent from the 1989 peak. Unlike the 1970s and 1980s, when real estate investments were considered a better investment than the stock market, home values in the 1990s appreciated at a much slower rate barely keeping pace with inflation. The only good news was declining mortgage interest rates. In January 1990, the average interest rate on a 30-year fixed-rate mortgage in the U.S. was 9.9% -- a significant decrease from the 17-18 percent rates of the 1980s.
The powerful Baby Boomer demographic reached its peak earning years in the 1990s and they traded their first or second homes for ones larger and more luxurious. New single-family homes increased in size to accommodate demand from Boomers but lot sizes became smaller. 8,000 square foot lots became the norm as developers pushed for larger homes on smaller lots.
Finding homes became easier than ever as multiple listing services began to publish their listings on the internet. Within a few years, REALTORS® began granting their clients access to MLS listings to search properties on their own. The practice ultimately revolutionized the process of looking for a home.
In 1993, Alabama’s economic prospects improved dramatically for the 1990s and beyond when Mercedes-Benz announced it would build its first U.S. assembly plant in Alabama. The first vehicle rolled off the assembly line in 1997. By then, Alabama’s economy was increasing its focus on international trade bringing Honda, Toyota, and Hyundai – as well as their suppliers -- to the state. Local communities embraced executives and managers from other countries including Germany, Great Britain, France, Spain, China, Mexico, Japan, and South Korea.
The Alabama Association of REALTORS® (AAR) made great strides politically and in member services during the 1990s. A 1997 state appropriations bill paved the way for first-time home buyers to receive down payment assistance. In 1998, new tax laws eliminated the capital gains tax on home sales. Recognizing its strength in numbers and potential influence, Alabama REALTORS® Political Action Committee was formed in November 1998. Embracing developing technology, AAR’s Fax on Demand benefit was offered to members that year. On the national level, the National Association of Realtors launched a consumer education campaign on the vital role REALTORS® play in real estate transactions.
To learn more about the Association's history visit our Centennial Anniversary page here.