1981
In 1981 there was a significant real estate market bubble. Back then, home buyers were faced with skyrocketing interest rates nearing 20%, and an annualized inflation rate of 12.5%. The unemployment rate was at 13%. This was the baby boomer period that saw a rise in demand for real estate.
The housing prices at that time were of course almost 1/10th of what they are today, but the baby boomer bulge that stampeded into the housing market was also faced with increased closing costs. More than 20% of the homes bought were sold within 6 weeks, indicating a number of investors trying to realize a profit though a quick flip. A profit they wouldn’t see for years to come. The demographic shift led to prices being pushed up, and we can see afterwards from 1981 the market cooling off, or the bubble bursting. The market softened for about 7 years before it saw another significant spike.
1990
This year saw a drop of sales ranging from 20-25%. Those who invested back then, could only now realize an appreciation of their asset up to 5.3%. Interest rates in 1990 were also very unfavourable, topping somewhere near 14-15% for 1 and 5 year mortgage rates. The average price for a home was about $220,000-230,000. When the housing bubble burst, there was a national default rate of 0.28%.