
Dated: March 18 2020
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![]() In times of uncertainty, one of the best things we can do to ease our fears is to educate ourselves with research, facts, and data. Digging into past experiences by reviewing historical trends and understanding the peaks and valleys of what's come before us is one of the many ways we can confidently evaluate any situation. With concerns of a global recession on everyone's minds today, it's important to take an objective look at what has transpired over the years and how the housing market has successfully weathered these storms. 1. The Market Today Is Vastly Different from 2008We all remember 2008. This is not 2008. Today's market conditions are far from the time when housing was a key factor that triggered a recession. From easy-to-access mortgages to skyrocketing home price appreciation, a surplus of inventory, excessive equity-tapping, and more – we're not where we were 12 years ago. None of those factors are in play today. Rest assured, housing is not a catalyst that could spiral us back to that time or place. According to Danielle Hale, Chief Economist at Realtor.com, if there is a recession:
In addition, the Goldman Sachs GDP Forecast released this week indicates that although there is no growth anticipated immediately, gains are forecasted heading into the second half of this year and getting even stronger in early 2021. 2. A Recession Does Not Equal a Housing CrisisNext, take a look at the past five recessions in U.S. history. Home values actually appreciated in three of them. It is true that they sank by almost 20% during the last recession, but as we've identified above, 2008 presented different circumstances. In the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6% (see below): 3. We Can Be Confident About What We KnowConcerns about the global impact COVID-19 will have on the economy are real. And they're scary, as the health and wellness of our friends, families, and loved ones are high on everyone's emotional radar. According to Bloomberg,
That said, we can be confident that, while we don't know the exact impact the virus will have on the housing market, we do know that housing isn't the driver. The reasons we move – marriage, children, job changes, retirement, etc. – are steadfast parts of life. As noted in a recent piece in the New York Times, Everyone needs someplace to live. That won't change. Bottom LineConcerns about a recession are real, but housing isn't the driver. If you have questions about what it means for your family's homebuying or selling plans, let's connect to discuss your needs. Contact us today Sheri 310.702.6999 or Jennifer 310.251.9001. "The market changes...our VALUES don't!" |
“The Market Changes … Our Values Don’t” is the guiding principle of doing business for the Beach Cities Real Estate Team. Boasting over 20 years of experience in real estate and being a consis....
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