Not long ago, we appeared to be staring into the abyss of a recession. Goldman Sachs had put the odds of a global recession in 2025 at 60%, although it has now dropped that estimate to 35%. The U.S. Bureau of Economic Analysis concluded that GDP in Q1 2025 decreased 0.3%, although estimates for Q2 are positive.
Given this situation and the enormous rise in housing prices over the last 15 years, many believe we are about to see a repeat of 2008. I explained some time ago why, even if there is a recession, there will be no repeat of 2008 in the housing market. But I’ve had enough run-ins with angry commenters explaining how the real estate market is about to collapse to know this perspective isn’t universally shared.
Part of it may be that with some dark economic clouds on the horizon, there is a tendency to believe the next economic crisis will be like the last, despite it rarely working out that way, historically speaking. However, some of it may just be that enough time has passed that many of us have forgotten what exactly caused the greatest real estate meltdown in American history.
So, let’s jump back in time to revisit the absolute madness that was the housing market in the first decade of the 21st century.
“Housing Prices Always Go Up”
I started investing in real estate in 2005 (good timing, right?), and one of the first things I heard was the very odd-sounding phrase, “Housing prices always go up.” Admittedly, the phrase itself usually came with a caveat: “OK, not always, but just about.”
Still, the sentiment hovered about like the air you breathed at the time and was said or implied in a thousand different ways. Now, obviously, it wasn’t true, but more importantly, why would anyone even think…