In spite of the fact we're in the longest economic expansion period in recorded history in the United States, it's the question we're getting from both Door County Buyers and Door County Sellers: when can we expect the next "economic correction"--and will it be a recession?
Remember when it seemed like every other property in Door County had a "For Sale" sign? Those days are no more! Dede Maxwell, CRS, does an excellent job of explaining the checks and balances that have gone into effect since 2008 and how they'll help temper the real estate market going forward--in Door County and throughout the US--as we move forward into 2020.
Recessions are a fact of life - as we often hear financial advisors say, “It’s not a matter of if but, when we’ll experience another one.” We don’t know - none of us have crystal balls and if you are a business owner as I am, you read, analyze data and come up with your own opinion. And, that’s just we all have about a possible correction/recession - our own OPINION!
We have heard from many in the news media that ‘this is the year’ or that ‘a recession is upon us.’ Really, their data is no better than ours - they’re stating conjectures - well, and we all know how they love sensationalism! That’s what sells in their business so, they stick with what ‘sells’ in their business. I call it ‘Chicken Little Syndrome!’ Sometimes, it’s at the expense of others’ businesses; in this case, their invalid conjectures are causing some who are/were thinking of buying or selling to hedge their bets a bit.
So, here are a few facts and the conclusion that those of us in the real estate business would like to share:
1. 53% of home purchasers (first-time and repeat buyers) currently in the market believe a recession will occur this year or next.
2. 57% believe the next recession will be as bad or worse than 2008.
3. 55% said they would cancel plans to move if a recession occurred.
Since we are currently experiencing the longest-ever economic expansion in American history, conjecture about a possible recession does seem like a ‘logical’ progression. Sadly, there is no ‘merit’ to these claims and all it does is remind buyers and sellers of the horrors of 2008 when they hear the word “recession.” It does tend to stop a LOT of people in their tracks - especially if you were a homeowner during the 2008 recession or were impacted by it in any way, shape or form.
Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, said it well, “With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”
Most experts, however, believe that, even if there is a recession, it will not resemble 2008. This housing market is in no way the same as it was just over a decade ago. Economist, Jeff Tucker, explained recently:
“As we look ahead to the next recession, it’s important to recognize how unusual the conditions were that caused the last one, and what’s different about the housing market today. Rather than abundant homes, we have a shortage of new home supply. Rather than risky borrowers taking on adjustable-rate mortgages, we have buyers with sterling credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago.”
Here’s a little tidbit that I firmly believe hits my point home:
In the past 23 years, there have been two national recessions – the dot-com crash in 2001 and The Great Recession in 2008. Home values fell 19.7% during the 2008 recession, which happened to be caused by a mortgage meltdown. However, during the dot-com crash/recession in 2001, stock prices did fall almost 25% but, home values appreciated 6.6%. The triggers of the next correction/recession will more closely mirror those from 2001 – not those from 2008. As you know, lending criteria is far more stringent than prior to The Great Recession of 2008.
No one can accurately predict when the next correction/recession will occur so, are you going to live your life fearing one? It is very important to realize that the impact of a recession on the housing market, regardless of when it occurs, will in no way resemble 2008.
Read related post: Keep Calm and Don’t Be a Chicken Little
Take if from the real estate professionals, the media has a political agenda with every story! Before you heed any recessionary warnings, dive into the facts - both locally AND from the professionals with boots on the ground in real estate! Call or text me at (704) 491-3310 today.
#NoRecessionHere #CharlotteHousingMarketStrong #ThisIsNot2008
© Debe Maxwell | The Maxwell House Group | RE/MAX Executive | CharlotteBroker@icloud.com | Keep Calm - The Sky is Not Falling! This Is NOT 2008
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