Mortgage Market

The Real Estate Industry is Going to be Fine

The National Association for Business Economic recently released their Economic Policy Survey for February 2019, disclosing that an economic down period is on the horizon. The panelists suggest that if a recession doesn’t happen in 2019, then it will happen in the years to follow. Many other sources have been predicting a slow economic period as well, including Pulsenomics, the Wall Street Journal, and Duke University. This begs the question; could a recession have a negative impact on the real estate market again?

A Housing Crisis is not guaranteed

The technical definition of a recession is “A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.” The housing collapse of 2008 caused the recession, which is why prices fell dramatically. But previous recession have had little to no negative impact on the housing industry.

  • January 1980 – July 1980: Home values up 4.5%
  • July 1981 – November 1982: Home values up 1.9%
  • July 1990 – March 1991: Home values dropped almost 1%
  • March 2001 – November 2001: Home values up 4.8%

It’s generally agreed among industry professionals that there is no immediate threat to the housing industry at the moment, even with a recession on the horizon. A cooling market does not equate to a crash. We’re seeing an increase in inventory and the prices of homes are beginning to balance. This is great news for both buyers and sellers.

In short

There’s no use panicking now, just because there may be a recession in years to come. The state of the housing market and our nation’s economic status are not directly linked. It’s also important to remember that just because a recession is likely to happen, does not mean it will be as devastating as the one of 2008.