Sewer vs SepticDepending on where you choose to live, the home you choose will either come with a sewer connection or a private subsurface waste disposal system, aka a septic system.What’s the
Are We Due For A Recession And What It Means To The Real Estate Market
Are We Due For A Recession... And What It Means To The Real Estate Market?
How likely is a recession in 2020? This is the question everybody’s asking. Hi, I’m Ryan Cook with HomeSmart First Class Realty.
We need to remember that next year is a presidential election year, and probably one of the most controversial elections yet. There will be a lot of questioning and political debates about the economy, why is it so good, and questioning if our economy is going to decline, so this can stir up a lot of hype.
Fannie Mae produces a monthly Home Purchase Sentiment Index® (HPSI) which has seen a decrease from its August highs, including an 8% drop in the net "Confidence About Not Losing Job" component and 7% drop in the net "Home Prices Will Go Up" component… signs that there is a generalized fear of an impending recession.
According to Doug Duncan, Senior Vice President and Chief Economist for Fannie Mae, "Consumer sentiment remains relatively strong overall, though uncertainty about the economy and individual financial circumstances appear to be weighing on housing market attitudes a bit more...”
This year, there have been four major surveys asking experts if they believe we are going to see a recession. 67% believe that we should see a recession, or some form of correction, by 2020.
Pulsenomics also surveyed analysts and 59% believe that we will see a recession by 2020. Why do they think this?
We've been in the longest recovery in American history, so we should expect to see a slowdown. Historically, we see a recession about once per decade… so we’re overdue.
While we’re on the topic… what, exactly, is a recession? According to Dictionary.com, it’s “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP, gross domestic product, in two successive quarters.”
We need to remember that recession does not mean housing crisis. In three of the last five recessions, housing prices actually increased during the recession.
Obviously, 2008 was the most drastic. Now, on the same survey from Pulsenomics that asked if they anticipated a recession, they also asked what would trigger the recession.
Number one was trade policy. Number two was stock market conditions, and number three was a geological crisis. Number nine on their list of triggers was housing slow down.
In 2008, our largest decline in appreciation was because of a housing slowdown and the situation in the mortgage industry. This year, we're not even in the top eight!
Also in the same survey, they asked about the median appreciation of housing. All the analysts said that the housing prices are going to go up, not down.
Appreciation is going to slow down, but the prices are still going up everywhere from about 2.5% to 4.1% through 2023.
Why is this important to know? We don't want to get in a panic about buying and selling and become afraid that it will be like 2008.
In fact, Morgan Housel, a well-renowned financial analyst posted an interesting Tweet. He said, “There’s a widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but statistically, highly unlikely. Could be over before you even realized it began.”
Prices and appreciation are expected to just be more normalized. Don't let all the hype about a potential recession scare you from the dream and benefits of home ownership.
In my opinion, it's one of the very best investments that you can make… but don’t just take my word…
If we analyze the results of the Pulsenomics survey, over 100 experts on the housing market predict a median increase in home values of 15.1% between now and 2023.
For a $400,000 home, that’s an equity gain of $60,400.
Finally, according to Mark Fleming, First American's Chief Economist, he says, "If the 30-year, fixed-rate mortgage "declines just a fraction more, "consumer house-buying power would reach its highest level in almost 20 years."
So what does this tell us? It tells us to not be so caught up with all the hype. Make the move, and as always, if you have any questions at all, please feel free to reach out to me, Ryan Cook with HomeSmart First Class Realty. When you’re in the know, you can’t get hosed.
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Are We Due For A Recession... And What It Means To The Real Estate Market?How likely is a recession in 2020? This is the question everybody’s asking. Hi, I’m Ryan Cook with HomeSmart First Class