Are we coming up on a recession? It’s the question everyone has been wondering for the last few years.With a controversial presidential election next year, there will a lot of talk about the economy, why it’s been so good and if we’re due for an economic slowdown. There have been four major surveys this year asking experts if they believe we are going to see a recession. 67% do believe that we should see a recession by 2020. Pulsenomics surveyed analysts, and 59% of that study 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. The GDP will slow down, but let’s just look up Webster’s definition of a recession, shall we?
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.
LET’S REMEMBER THAT RECESSION DOES NOT MEAN HOUSING CRISIS!
Obviously, 2008 was awful and fresh in people’s memories but did you know that In three of the last five recessions, housing prices actually went up during the recession?
Now, on the same survey Pulsenomics survey they also asked what would might trigger the next recessions 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 shady situation in the mortgage industry. That is simply no longer the case.
Also, in the Pulsenomics 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 gonna be 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 all over again.
In fact, Morgan Housel, a well-renowned financial analyst said “an interesting thing is that the 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 after years of very steep recovery. Don’t let all the hype about a recession scare you from the dream and benefits of home ownership. Owning property is one of the most effective tools average Americans have to generate wealth.
Mark Fleming, First American’s Chief Economist, says that 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 don’t get caught up in the fear and the trauma from 2008 and miss such an excellent time to buy real estate. It’s a great time to make an investment that takes your life to the next level while interest rates are so low.