The 2010s - The Challenges Continue
November 1, 2022
The trials of the previous decade spilled over into the second decade of the 21st Century beginning in 2010. The real estate industry, still reeling from the 2008 financial crisis and ensuing recession, struggled with an oversupply of houses that few could buy. Roughly one in seven mortgages was either in default or foreclosure and one in four homeowners owed more on their mortgage than their property was worth. The weak economy led to a lack of demand for houses just as newly foreclosed properties were coming on the market. The excess inventory led to falling prices and, coupled with cheap interest rates, created a buyer’s market.
The federal government stepped in to stimulate home sales with incentives for buyers. Just before the dawn of the 2010 decade, President Barack Obama signed a bill extending an $8,000 first-time homebuyer tax credit and adding a $6,500 tax credit to entice existing homeowners to buy a new home.
By March, 2011, U.S. homeowners had a massive $750 billion in negative equity, according to CoreLogic. A few months later, in November, mortgage interest reached a record low at under four percent for the first time in history. Still, many would-be homeowners were on the sidelines because of tightened credit.
Better market conditions began to appear as the decade progressed. Over the course of nine years, the national median home resale price rose 35 percent and unemployment fell to 3.5 percent by 2019. At the end of the decade, homeowners held $19.7 trillion in home equity achieved by paying their mortgages off over time and not cashing out their equity.
The Baby Boomer generation began to reach retirement age in 2011 signaling a possible trend toward downsizing and relocating. At the same time, the majority of millennials reached age 21 and began to enter the real estate market.
Meanwhile, in Alabama, the Alabama Association of REALTORS® experienced a series of manmade and natural disasters that devastated many areas of the state. The 2010 Gulf Coast Deepwater Horizon Oil Spill tainted beaches along the state’s gulf coast causing a sharp downturn in coastal home sales and widespread rental cancellations. AAR worked with state leaders and a coalition of business groups to secure a $60 million fund to help pay claims of lost income. In 2011, much of Alabama experience devastating tornado damage. The AAR Disaster Relief Fund helped members and consumers recover from the devastation from these events and others.
Through the early to middle part of this decade, the Association itself experienced financial difficulty, legal and regulatory scrutiny, and instability. Consecutive years of deficit spending, lax legal compliance, deferred building maintenance, internal division, and outdated governance jeopardized the Association’s existence. During the latter part of the decade, the Association’s leaders rallied to right the ship. Stronger financial management, legal compliance, and streamlined governance paved the way for greater stability and more services for members. As the 2010 decade drew to a close, REALTORS® saw promising days ahead with a stronger Association, an improving economy, low interest rates, and low unemployment.
To learn more about the Association's history visit our Centennial Anniversary page here.