Everyone remembers, or has heard about, the 2008 housing crash, but no one talks about the one before.
Let’s hot-tub time machine back to 1984 Los Angeles. The Olympics were here and the Southern California economy was red-hot. Home values doubled from 1984 to 1990.
But the music stopped – abruptly – in early 1990. Enter recession: Post-Cold War defense cuts hollowed out the Los Angeles economy, and job losses were among the highest in the nation.
The result was chaos in the Los Angeles housing market. Homeowners who were laid off rushed to sell. Others were foreclosed on. Home prices started their decline in 1990 and collapsed by over 20% before bottoming out in 1996.
It took four years for prices to recover to their previous highs. Meaning that those who bought a home in Los Angeles in 1990 had to wait 10 YEARS – until 2000 – to recover their acquisition value.
And just 8 years later, it all happened again. From 2008 to 2012 (the “Great Recession”), home values dropped by 37%. As recently as two years ago, some 2006 Los Angeles home buyers were STILL underwater.
This means that in 10 of the last 30 years Los Angeles home values have been in decline. And still, anyone who bought and held in the past 30 years - regardless of whether they bought at the top or bottom - does not mention these terrifying, recessionary periods: they all feel like GENIUSES. Geniuses sitting on piles of cash.
Don't be afraid of a downturn. Buy and hold baby.
