Homeownership and Inflation Do's and Don'ts

By
Real Estate Broker/Owner with Charles Stallions Real Estate Services

 

The One Thing Every Homeowner Needs To Know About a Recession

The National Bureau of Economic Research (NBER) defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

To help show that home prices don’t fall every time there’s a recession, take a look at the historical data. There have been six recessions in this country over the past four decades. As the graph below shows, looking at the recessions going all the way back to the 1980s, home prices appreciated four times and depreciated only two times. So, historically, there’s proof that when the economy slows down, it doesn’t mean home values will fall or depreciate.

The One Thing Every Homeowner Needs To Know About a Recession | Keeping Current Matters

The first occasion on the graph when home values depreciated was in the early 1990s when home prices dropped by less than 2%. It happened again during the housing crisis in 2008 when home values declined by almost 20%. Most people vividly remember the housing crisis in 2008 and think if we were to fall into a recession we’d repeat what happened then. But this housing market isn’t a bubble that’s about to burst. The fundamentals are very different today than they were in 2008. So, we shouldn’t assume we’re heading down the same path.

We’re not in a recession in this country, but if one is coming, it doesn’t mean homes will lose value. History proves a recession doesn’t equal a housing crisis.

Bottom Line

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Comments (2)

June Piper-Brandon
Coldwell Banker Residential Brokerage - Ellicott City, MD
Piecing Dreams One Home at a Time

You are so right, people are still buying homes.  The thing is you are buying a home whether you know it or not.  If you are paying rent, you are buying a home for your landlord.  If you are paying a mortgage, you are buying a home for yourself.  

May 27, 2022 11:03 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Great post, have a great Holiday weekend, with a chance to rest up. Bill

May 27, 2022 11:55 AM