House Prices can Still Increase in a Recession.
Expert in the media is talking about an upcoming recession in the spring of 2023 or later on. So does the recession equal a housing crisis? That’s the question. Let’s find out what it means when are cession coming up and if it’s coming up.
Hi, I’m Mike Patel with first-team Real Estate, right here in Enhance Hills. As of today, June 16, I just noticed that the stocks are down almost 700 points. In fact, they’re down 30,000. After a long time, inflation is over 8%. Yesterday, the Feds increased the interest rate to almost zero, 75 plus yesterday. Now it’s over 6%. So, wow, are we getting into a recession? And the concern with a lot of home sellers and home buyers is how will that affect my house value? Well, here’s the good news housing or recession does not mean a housing crisis. Let’s analyze that to help show you that every recession, or when a recession comes, home prices don’t fall. Let’s look at the historical data for the past six recessions.
This information is from CoreLogic and according to them, in the last six recessions, there were four times when the home prices actually increased and only two times did the home prices go down. So historically, there is proof that every time a recession goes or comes about doesn’t mean the prices are going to go down or there’s a housing crisis. Let’s look at it a little bit more in detail. The first location on the graph when home values depreciated was in the early 1990s when home prices dropped by less than 2%. It happened again during the housing crisis in 2008 when home values declined by almost 20%. That’s quite a bit of a drop. Most people vividly remember the housing crisis in 2008 and think if we were to fall into a recession we’d repeat what happened then. But this housing market isn’t a bubble that’s about to burst. The fundamentals are very different today as they were in 2008.
So we shouldn’t assume we are heading down the same path. The bottom line is we’re not in a recession in this country. Not yet. But if one is coming, as they predict, in the spring of 2023, it doesn’t mean homes will lose value. History proves a recession doesn’t equal a high zing crisis, whether you’re in AnHills or Orange County, or California. And if you have concerns about the housing crisis or the housing bubble, or what’s going to happen with the house prices, are they going to go up? Are they going to go down? Home sales are going to decline? Are we going to be in a recession? If you’d like to chat direct, message me, I’ll be glad to give you some resources and chat with you about your particular situation.