I wanted to write this article because I have been getting a lot of questions and concerns about an upcoming Recession and what that will mean for the housing market in Santa Cruz. I want people to know that a Recession does not equal a Housing Crisis!
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We all remember the last Great Recession in 2008 and that is was caused by the housing market and subprime loans. Home prices dropped dramatically in 2008 in Santa Cruz (over 22%!) The next Recession, which will occur sooner than later, will not be caused by the housing crisis. It is more likely to be caused by the stock market, trade war or global event. When the Recession happens, it does not necessarily mean that home prices will go down. There was a recession in 2001, and home prices in Santa Cruz actually went UP during that time. A Recession is defined at 2 consecutive quarters of ecomonic slowdown, and recessions are a natural part of the cycle of the economy.
When the stock market is unstable, many investors turn to real estate because it is a safer investment. At least you know that your investment will not completely disappear and you have a tangible asset. Yes, the value of a home can go down, but if you hold it for long enough, you will be able to ride it out.
There has been a lot of talk of a market slow down for housing, and while it certainly is not the frenzy of previous years, home prices have gone up overall in Santa Cruz county this year, and most homes sell in 30 days or less. Interest rates have gone down a lot this year and combined with slightly more homes on the market, buyer are still out there in droves.
If you have any questions, as always feel free to contact me to get the real scoop on what is going on in our local market.