Many people want to know about how the economy is doing—specifically, how the housing market will be impacted by the recession.
First American Financial Services is a large title company that examined the country’s housing market and how it reacted to recessions over the past 100 years. Odeta Kushi, Deputy Chief Economist at First American, had this to say:
“While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980. In fact, the housing market may actually aid the economy in recovering from the next recession—a role it has traditionally played in previous economic recoveries.”
Looking back on the Great Recession, there were a few factors leading up to it that we don’t see today. One of those factors was the prevalence of subprime loans that were given to people. To qualify, all people had to do was state their income and they’d be approved for financing. Many times, those people who were buying houses were also on adjustable-rate mortgages, which were cheap in the beginning and would become much more expensive over time. That, in turn, would leave homeowners underwater and unable to cover their payments, which would leverage many into foreclosures.
It’s important to keep in mind that what happened back then isn’t happening today. People who are getting mortgages are more qualified to afford their mortgages than they’ve ever been before.
Inventory may be low, but that’s a result of pure supply and demand; supply is low and demand is high. That causes home prices to rise, and every indication suggests that that will only continue.
Though I don’t have a magic 8-ball, most analysts will tell you that the real estate market appears to be very healthy right now and that could lead us out of the recession. If you’re waiting for home prices to dip before entering the market to buy, just know that won’t be for a long time.
If you have any questions about the market or the economy as they relate to your real estate plans, feel free to reach out to us. We’re always happy to help.
