Momentum - Business to Business Online Magazine MOMENTUM October 2019 | Page 34

REAL ESTATE DEBORAH BLY The Bly Team - RE/MAX Space Center [email protected] www.TheBlyTeam.com Are we headed toward a RECESSION? E ven Scarier yet, are we headed toward another housing crisis? August had some captivating headlines. So, what is happening in the market. Is there a recession coming and if so, what is going to happen to home values? Going to conventions all over the country and following some of the strongest financial analysts in the nation, here is the truth ... that I am hearing. In August when the stock market took a dive it created a lot of headlines and at the same time created fear in the consumer. Surveys done by Realtor.com and The National Association of Realtors show that the consumer thinks there is going to be a recession. What is a little alarming... is that 6 out of 10 of those consumers think that it is going to be as bad or worse than the recession we had in 2008. The reality is...We are in the longest run of economic recovery in our country’s history. It has to come to an end eventually. When a recovery comes to an end... that means the economy slows down. And of course, the term for that is a recession. But... recession does not mean housing crisis. 32 MOMENTUM In the slide below and you can see what happened in the last 5 recessions. On the right, you can see that in the 2008 recession, nationwide on average housing prices dropped by 19.7% A significant housing crisis! But... this recession in 2008 was caused by 2 things: ... a mortgage market meltdown followed by a housing depreciation rush. Looking at the rest of the slide you can see that of the 4 recessions before that, only 1 of them saw housing depreciation and it was only at 1.9 %. In the other 3 cases... home prices actually gained value... and, in 2 of those cases instead of the average 3.5% housing appreciation per year that we typically have seen... 2 of those cases had almost double appreciation. In 2001 stock market prices dropped by almost 25%... yet housing prices went up 6.6%. What happened then? Smart investors pulled out of the stock market and started buying houses. Recession does not = housing crisis. Don’t let it confuse you... don’t let scare you. Right now with opportunistic low-interest rates, we are witnessing an unprecedented market for buyers. My goal is that you don’t make decisions out of fear and panic, but that you stay educated.