How a recession could impact the housing market

[Neil Narayan]

A bevy of negative news this week has once again stoked fear that an economic downturn is imminent, however recessions don’t always impact housing with the same force as the job market or other sectors of the economy. Looking at home prices during the last five recessions since 1980, home prices come down only twice (1990 and 2008), and in 1990 it was by less than a 1%. During the other three, prices actually went up 🤯🙌💵

https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates?fbclid=IwAR3T-JqDCJzH4Ie4D3M7e23mKFpZEKEZ1omNc-jGq83Q07fKBDIPrMmL7Ww

[Account Closed]

Originally posted by @Neil Narayan:

A bevy of negative news this week has once again stoked fear that an economic downturn is imminent, however recessions don’t always impact housing with the same force as the job market or other sectors of the economy. Looking at home prices during the last five recessions since 1980, home prices come down only twice (1990 and 2008), and in 1990 it was by less than a 1%. During the other three, prices actually went up 🤯🙌💵

https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates?fbclid=IwAR3T-JqDCJzH4Ie4D3M7e23mKFpZEKEZ1omNc-jGq83Q07fKBDIPrMmL7Ww

There isn't any reason to believe there will be a recession anytime soon.

First we have to explain what a recession is:

• 1. Decline in real gross national product for two consecutive quarters (6 months).
• 2. A 1.5% decline in real GNP.
• 3. Decline in manufacturing over a six-month period.
• 4. A 1.5% decline in non-farm payroll employment.
• 5. A reduction in jobs in more than 75% of industries for six months or more.
• 6. A two-point rise in unemployment to a level of at least 6%.

By definition if the economy tanked today, it would still be 6 months before you would call it a recession and the economy is strong right now.

Could housing "correct" in the next 12 to 18 months? It already is "correcting" in some markets along the west coast, but doing fine throughout other markets.

Could the Stock Market take a big hit? Yes, and it probably will. The big money (hedge funds and institutional investors) could very quickly move their money from the Stock Market to housing and other commodities to preserve their assets, but that is not what a recession is.

A recession is based on production across the general economy, not on profit taking from the speculation on Wall Street.

We are fine. Buy wisely and prosper.