The Truth Behind Recessions and Real Estate

    Although a recession may be on the horizon, I wouldn’t worry about it if you’re a homebuyer. Here’s why.

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    Are we on the brink of another recession? A lot of people are concerned, but today I wanted to take a couple of minutes to talk about the facts that we know.

    You’ve probably seen a lot of headlines on the news about a possible recession, and you’ll probably continue seeing them up until the 2020 election. One party will say that the economy is doing great, while one party will say it’s not in great shape. However, I want to talk about the facts and what economists really think is going to happen with our economy.

    There have been four major surveys this year of economists with their predictions about the economy. At 1:08 in the video above, you can see these four surveys spelled out. When you merge them into one graph, 67% of economists believe that the recession will begin in the next 15 months.

    We’re in the longest period of recovery of all-time since the previous recession. At some point, the economy has to slow down. In a recession, the GDP declines in two consecutive quarters. Some economists believe that this recession will be minor and brief. It could be over before we even realize it.

     

    Despite what you’ve read in the headlines, I wouldn’t panic about the housing market.

     

    Most of us think of 2008 and the housing crisis when we think of a recession. However, most economists believe that will not be the case this time. Those economists that were surveyed actually believe that home values will continue to rise over the next five years. Appreciation will be down, but still positive. Homes going up in value is good news, even in a recession.

    Finally, during the last several recessions, you can see that homes continue to appreciate. In 1980, they went up by 6.1%. In 2001, they went up by 6.6%. Because of bad lending practices, values did drop by 19.7% in 2008.

    Despite what you read in the headlines, I wouldn’t panic about the housing market. If you’re thinking of buying or selling a home soon, there is no meltdown coming and the market is still doing pretty great.

    If you have any questions for me about buying a home, selling a home, or real estate in general, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

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