If you need assistance, please call 971-208-5093

Three Reasons Why This Is Not a Housing Crisis

Wednesday, March 18, 2020   /   by Amy McLeod

Three Reasons Why This Is Not a Housing Crisis

Screenshot (228).png


In times of uncertainty, one of the best things we can do to ease our fears is to educate ourselves with research, facts, and data. Digging into past experiences by reviewing historical trends and understanding the peaks and valleys of what’s come before us is one of the many ways we can confidently evaluate any situation. With concerns of a global recession on everyone’s minds today, it’s important to take an objective look at what has transpired over the years and how the housing market has successfully weathered these storms.


1. The Market Today Is Vastly Different from 2008


We all remember 2008. This is not 2008. Today’s market conditions are far from the time when housing was a key factor that triggered a recession. From easy-to-access mortgages to skyrocketing home price appreciation, a surplus of inventory, excessive equity-tapping, and more – we’re not where we were 12 years ago. None of those factors are in play today. Rest assured, housing is not a catalyst that could spiral us back to that time or place.


According to Danielle Hale, Chief Economist at Realtor.com, if there is a recession:


“It will be different than the Great Recession. Things unraveled pretty quickly, and then the recovery was pretty slow. I would expect this to be milder. There’s no dysfunction in the banking system, we don’t have many households who are overleveraged with their mortgage payments and are potentially in trouble.”


In addition, the Goldman Sachs GDP Forecast released this week indicates that although there is no growth anticipated immediately, gains are forecasted heading into the second half of this year and getting even stronger in early 2021.



Both of these expert sources indicate this is a momentary event in time, not a collapse of the financial industry. It is a drop that will rebound quickly, a stark difference to the crash of 2008 that failed to get back to a sense of normal for almost four years. Although it poses plenty of near-term financial challenges, a potential recession this year is not a repeat of the long-term housing market crash we remember all too well.


2. A Recession Does Not Equal a Housing Crisis


Next, take a look at the past five recessions in U.S. history. Home values actually appreciated in three of them. It is true that they sank by almost 20% during the last recession, but as we’ve identified above, 2008 presented different circumstances. In the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6% (see below):



3. We Can Be Confident About What We Know


Concerns about the global impact COVID-19 will have on the economy are real. And they’re scary, as the health and wellness of our friends, families, and loved ones are high on everyone’s emotional radar.


According to Bloomberg,


“Several economists made clear that the extent of the economic wreckage will depend on factors such as how long the virus lasts, whether governments will loosen fiscal policy enough and can markets avoid freezing up.”


That said, we can be confident that, while we don’t know the exact impact the virus will have on the housing market, we do know that housing isn’t the driver.


The reasons we move – marriage, children, job changes, retirement, etc. – are steadfast parts of life. As noted in a recent piece in the New York Times, “Everyone needs someplace to live.” That won’t change.


Bottom Line


Concerns about a recession are real, but housing isn’t the driver. If you have questions about what it means for your family’s homebuying or selling plans, reach out to The McLeod Group Network to discuss your needs. 971.208.5093 or admin@mgnrealtors.com.


By: KCM Crew


  amy mcleod, mcleod group network, homeowners, homebuyers, home sellers, home values, home prices, housing market updates

The McLeod Group Network - KW Capital City
Amy McLeod
1900 Hines St SE, Suite 220
Salem, OR 97302
971-208-5093
Lighthouse Home Loans.png

Lighthouse Mortgage
Phil Gerstner
110 Wallace Rd. NW
Salem, OR 97304
503-871-4968
NMLS# 291931

Traci Benjamin
Churchill Mortgage
Sales Manager, AVP
traci.benjamin@churchillmortgage.com
NMLS 111736
Direct: 503-751-2288
Cell: 503-932-5511

image001 (2).png

Aaron Memmott
Finance of America
Mortgage Advisor
amemmott@financeofamerica.com
NMLS# 1048117
Direct: (503) 718-9876
Cell: (503) 551-1115
Fax: (855) 639-2956

Caliber Home Loans logo.jpg

Elizabeth Smith
Caliber Home Loans
elizabeth.smith@caliberhomeloans.com
NMLS# 228191
Cell: 503-910-0415
eFAX: 844-538-4687

© 2020 Willamette Valley Multiple Listing Service. All rights reserved. The data relating to real estate for sale comes in part from the Willamette Valley Multiple Listing Service. Information contained on this site is deemed reliable but not guaranteed.
This site powered by CINC: www.cincpro.com