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.