Recession & Housing Market
This is June 2020 and are we in a recession? According to the National Bureau of Economic Research the U.S. economy is officially in a recession. This should not be a surprise, it was almost predictable due to the shutdown of the country causing a significant decline in activity.
The question many are asking does a recession mean a decline in home prices. Perhaps like you, I remember the devasting impact the last recession had on the market back in 2008/2009.
This current recession is different. In 2008 housing actually led the recession. This time is not like that time and some predict the housing market may actually push the economy forward. Here is why this time is different.
- Homeowners have equity in their homes
- There is a shortage of inventory and lots of buyers
- Home price appreciation is not out of control
- Crazy lending no longer exists. Buyers have to qualify for a mortgage, put money down and have a job.
And something else to note, that in the four recession prior to 2008, three of the four saw prices increase which the one that didn't increase only fell one percent.
To put the numbers in perspective in our local market a look at two cities showed no real price decrease from 2019 for the same time period.
- San Ramon - 2020 average sales price $1,049,764; 2019 average price $1,065,312
- Danville - 2020 average sales price $1,381,652; 2019 average price $1,385,807
Bottom line, yes we are currently in a recession. However unlike 2008 there is an abundance of buyers eager to move forward with a home purchase.