If you’re worried about a recession having a negative impact on the real estate market in Clark County, think again.
Who can predict a Recession?
First of all, no one knows for certain when a recession will hit. Regardless of what you’re hearing from media outlets, there is no economic data or research that suggests we can look 12 months into the future and predict a recession.
It makes one wonder why we keep hearing the R-word tossed about in such a cavalier manner. Sadly, it’s become somewhat standard in our country to use fear and speculation to report the news.
Do you remember the 1997 movie, Wag the Dog? If not, it’s about a spin doctor, who prior to an election, fabricates a war to cover up a Presidential sex scandal. There are suggestions that there’s some wagging going on right now.
Regardless, let’s stick to something I (Debb) used when working as a radio newswoman in Portland, facts and common sense. What a concept!
Just the Facts Ma’am
Whether a recession comes in a year, two years, or ten years, it’s not likely to have much of an impact on our local housing market.
Fact: Since 1980 there have been five official recessions in the U.S. Aside, from the Great Recession ( 2007-2009), inflation adjusted housing prices only declined 2.7 percent from the month before the recession began to the final month, according to the home price index data from Robert Shiller.
Fact: The 2008 recession, which was an anomaly, didn’t cause the housing market to plummet into chaos, the plummeting housing market caused the recession.
Contributing factors to the housing market freefall included:
Lenders issuing expensive, high-risk mortgages designed to fail.
A glut of new construction inventory, causing prices to drop rapidly.
Homeowners defaulting on loans and homes going into foreclosure.
Fact: The next recession, if and when it comes, will be a natural end to economic expansion that has been going on since 2008. In other words, it is likely to be a pretty standard downturn and has nothing to do with mortgages and the housing market.
Fact: The current housing market is almost opposite of what it was in 2008 - tight mortgage credit, not loose, and housing supply shortages instead of a surplus.
Fact: The local real estate market is healthy. Inventory remains tight, at 2.3 months, which means it takes that period of time to sell all of the current inventory. A balanced market is 6 months of inventory. Bottom line:It remains a strong sellers market in Clark County, Washington.
Finally, let’s use some common sense.
Historically, as far as home prices dropping in the wake of a recession, 2008 was the exception. During two mild recessions in the early 1980’s, home prices increased, just as they did in the early 2000s.
It's unnecessary to be manipulated, don’t let unsubstantiated rumors and fear mongering prevent you from moving ahead and living life. Look at the facts and use common sense.
Want to sell a home? It’s the perfect time
Want to buy a home? It’s the perfect time.
This is an entry into the September Challenge hosted by Debe Maxwell, CRS.