Coming up on today’s episode…
• Is a housing crisis coming?
• What is likely to cause a recession?
• How is housing affordability looking?
Is a HOUSING CRISIS Coming?
After the longest period of economic recovery in American history economists and market analysts are saying a recession is coming! However, the fact is that a recession simply means that the GDP (gross domestic product) has fallen for two consecutive quarters. This does NOT mean a HOUSING CRISIS! Out of the past 5 recessions, only 1 (the one in 2008) saw a major drop in house prices. One saw a house price drop of less than 2% and the remaining three saw a 3-6% appreciation rate.
What is likely to CAUSE A RECESSION?
Top three likely triggers for the predicted economic slow down:
1). Trade Policy
2). Stock Market Correction
3). Geopolitical Crisis
What about a HOUSING SLOWDOWN?
Where is that predicted to factor? It’s coming in at number 9 on the list of likely triggers for a recession (so very unlikely)
What about HOMEOWNERSHIP RATES?
With all the talk of a recession, are people still buying? YES! The national homeownership rate has continued to increase or remain the same (depending on the specific area), year over year since 2016.
What about HOUSING AFFORDABILITY and INTEREST RATES?
Together with increased homeownership rates, interest rates have fallen from 4.75% to 3.75% in the past 8 months, increasing the affordability of purchasing (according to Freddie Mac).
AND!
If the 30-year, fixed-rate mortgage declines just a fraction more, consumer house-buying power would reach its highest level in almost 20 years (according to Mark Fleming, First American’s Chief Economist).