Is a Recession Here? Yes. Does that Mean a Housing Crash? No. - EXIT Homevets Realty - Central Texas Real Estate Professionals!

Dated: 06/11/2020

Views: 236

Is a Recession Here? Yes. Does that Mean a Housing Crash? No. | MyKCM

On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

Everyone realizes that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”

Though not surprising, headlines announcing the country is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.

The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First Americanexplained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Four major differences in today’s real estate market are:

  1. Families have large sums of equity in their homes
  2. We have a shortage of housing inventory, not an overabundance
  3. Irresponsible lending no longer exists
  4. Home price appreciation is not out of control

We must also realize that a recession does not mean a housing crash will follow.  In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.

Bottom Line

Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
Blog author image

Yamilet Berlingeri

Allowed me to introduce myself, My name is "Yamy". I am a Licensed Real Estate Person who's Job is described as the Administrative Support Assistant and Office Manager at Exit HomeVets Realty. I am ....

Latest Blog Posts

Americans Rank Real Estate Best Investment for 7 Years Running [INFOGRAPHIC] - EXIT Homevets Realty - Killeen TX REALTORS®

Some HighlightsReal estate has outranked stocks, savings accounts, and gold as the best long-term investment among Americans for the past 7 years.The belief in the stability of

Read More

Taking Advantage of Homebuying Affordability in Today’s Market - EXIT Homevets Realty - Central TEXAS REALTORS®

Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact

Read More

Not All Agents Are Created Equal - EXIT Homevets Realty - Killeen, TX REALTORS®

In today’s fast-paced world where answers are just a Google search away, there are some who may question the benefits of hiring a real estate professional when selling a house. The reality is,

Read More

Best Time to Sell? When Competition Is at an All - Time Low - EXIT Homevets Realty - Central TEXAS REALTORS®

In a recent survey of home sellers by Qualtrics, 87% of respondents said they were concerned their home won’t sell because of the pandemic and resulting economic recession. Of

Read More