Recessions & Real Estate, What's the Big Worry About?

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Education & Training with The Lones Group, Inc.

The Lones Group, Inc.

 

Recessions and Real Estate, What's the Big Worry all About?

Have you ever wondered how previous recessions have affected real estate prices?  This is a common question I get asked by agents and consumers anytime the word recession is brought up.  The term, “recession” can scare anyone who has been through one and were caused financial strain as a result. Therefore, the word recession often brings up fear rather than the true and accurate picture of what happens during a recession. The reality of what happens to real estate prices during a recession is a great example of that.

The key to managing that fear is to look at historic numbers. While it is true that Gross Domestic Product (GDP) goes down during a recession and the economy is affected, that is not necessarily true of real estate prices. Below are statistics regarding GDP and how real estate prices were affected in past recessions:

PERIOD OF RECESSION GDP Real Estate Prices
January 1980 July 1980 Down 2.2% Up 4.5%
July 1981- November 1982 Down  2.7% Up 1.9%
July 1990 – March 1991 Down  1.4% Down 0.9%
March 2001 – November 2001 Down 0.3% Up 4.8%
December 2007 -June 2009 Down 5.1% Down 13.1%

You will notice that historically real estate prices have risen during a recession except a minor decline in the 1990-1991 recession. All other recessions except the Great Recession saw an increase in real estate sales prices. I do not use the data from the Great Recession of 2007-2008 as a normal finding because that recession was greatly impacted by problems brought on by lack of legislation around mortgage lending. That has now been addressed with the Dodd-Franks legislation so I anticipate the next recession to have a neutral impact on real estate prices.

So don't panic when you hear the word recession. Just know that you will continue to be needed to help your clients buy and sell real estate.

 

By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.

The Lones Group, Inc.
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Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Only time will tell but I think you have the right attitude, Denise. All the best!

Nov 08, 2019 09:54 PM #1
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Denise Lones

CSP, MIRM, CDEI - Real Estate Coaching & Branding
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