- Hi, my name is Mike Renick.
I'm the Team Lead, the Senior
Broker, of Team Renick.
Part of that great Better Homes
and Gardens Atchley Properties family.
What I'd like to talk
about is the big R word
from the perspective of
real estate: recession.
We hear it on the radio, we see it on TV,
we read about it in print,
we're talking about it
at the water cooler, it's
everywhere right now.
So what's the question
we need to ask ourselves?
Is it will there be a recession?
Or when will the next one occur?
My opinion is, it's the latter.
When will the next recession begin?
I think most of the experts
agree we'll have a recession.
It's just what's the
impact? When will it start.
So when we look at the four surveys
that are on the screen right now,
you'll see that most of them
kind of come around 2020
with their forecasts.
Let's put everything together,
and basically of the
folks that were surveyed,
46% are suggesting 2020.
Doesn't make it right,
but that's what the experts are saying.
24% are saying it won't occur until '21.
But let's define the "it."
What does that mean?
What's the impact, how bad will it be?
Is it significant, is it not?
What's the impact to housing?
Those are the questions.
So we're pretty certain
in the next year or so,
maybe two years,
we'll see a recession.
Let's look at a couple of folks
who shared their thoughts
about past recessions.
Ben Bernanke.
He suggests, "My results do
suggest that, in the absence
"of the panic, the declines
in employment, consumption
"and output in the early
stages of the Great Recession
"would have been
significantly less severe."
Warren Buffet, "Fear spread
like a tsunami in 2008."
None of those factors are occurring today.
Recession does not equal housing crisis.
Let's look at the
definition of a recession.
It's simply a period of
temporary economic decline
during which trade and
industrial activity are reduced,
generally identified
by a fall in GDP in two
successive quarters.
Let's look at what happened
over the past five recessions.
Three of them had no negative
impact on housing whatsoever.
In 1980 home prices actually
rose a little bit over 6%.
In '81, the next recession, up 3.5%.
'91, we saw almost a 2% decline.
In 2001 over 6.5% increase,
in 2008, which is on everyone's mind,
we're all familiar with,
almost a 20% decline.
So three of the last five recessions
had no impact whatsoever.
And basically that's what
the experts are saying
will happen this time.
Let's look more at that.
What are the top three triggers
according to the experts?
They're suggesting trade
policy could cause it,
the stock market correction,
or geopolitical crisis.
That's the top three that
will trigger the slowdown.
Coming in way down at number nine,
is a housing slowdown.
Not on the top of anyone's
radar in terms of the downturn.
What's the mean price
percentage appreciation?
They're suggesting going
out 2.8% next year,
2.5% in '21, 3% in '22 and 3.4% in '23.
Prices are still,
according to the experts,
predicted and projected to rise.
Let's look what Morgan Housel had to say.
"An interesting thing is
the widespread assumption
"that the next recession
will be as bad as 2008.
"Natural to think that way, but,
"statistically, highly unlikely.
"Could be over before
you realized it began."
Let's look at home ownership rate.
That's another factor that
could impact recessions.
If we go back to 2016,
and we look forward,
home ownership rate is
actually increasing.
And it's projected to continue that way.
We saw how it fell off around
2008 and during that downturn.
But it's projected right
now to get even better
as time goes on.
So again, no forecasted
impact at that point in terms
of the recession.
Affordability, another key factor.
They're saying the affordability
index is going to rise,
continue to rise.
It rose from 30% in 2018 to 40%.
What goes into that?
Let's take a look at it
from another perspective
and then we'll address that.
We see that home affordability
during the 2008 recession
was very high,
but that's because of the short sales
and the foreclosures that were out there.
Going forward from this time frame,
we see it's still, from
an all term perspective,
looking back at 1990, it's
still going to remain high.
Definitely not a key for recession.
So when we put all of this together
and we look at everything
that's happening,
we talk to the experts,
we look at the data,
none of it suggests the
housing industry's going
to be impacted.
The recession should be short,
it should come sometime
in the next year or two,
and we should continue to see prices go up
and sales continue to be strong.
That's what the experts are saying.
I wanted to share this with you.
I'll bring periodic updates
as more information becomes available
as we all watch this together.
Is now the right time to buy or sell?
That's a personal decision.
I'd like to work with you,
and work through the factors
that impact you, to help
you make the decision
that's right for you.
Feel free to give me a call.
My personal cell, which is what
I leave for all my clients,
is (941) 400-8735.
I look forward to talking with you,
I look forward to working with you,
and I'm here for whatever you need.
Thanks for watching.
