How likely is a RECESSION in 2020?
This is the question of the
hour, it's on everyone's mind.
Hi, I'm Heather Witte,
Owner of The Witte Group.
We need to remember that next year
is a presidential election year
and it could be one of the most
controversial elections yet.
There's going to be a lot of
questions and political debates
about the health of our
economy - why is it so good? -
and fear over whether our
economy is going to decline.
So, this can stir up a lot of hype.
There have been 4 major
surveys so far this year alone
asking experts if they believe
we are going to see a recession.
67% do believe that we should
see a recession by 2020.
Pulsenomics surveyed
analysts, and 59% of those
believe that we will
see a recession by 2020.
Why do we think this is?
Well, we've been in the longest recovery
in American history,
so we should expect to
see a bit of a slowdown.
The GDP will slow down, but let's look
at Merriam-Webster Dictionary's
definition of a recession.
A period of temporary economic decline
during which trade and
industrial activity are reduced,
generally identified by a fall in GDP,
gross domestic product, in
two successive quarters.
We need to remember
that "recession" DOES NOT
mean "housing crisis".
In fact, in 3 of the last 5 recessions,
housing prices actually
increased during the recession.
Now, obviously, 2008 was the
most drastic in recent history.
Now, in the same survey from Pulsenomics
that asked if they
anticipated a recession,
they also asked the same analysts
on the same day in the exact same survey
what would trigger the recession.
#1 was trade policy.
#2 was stock market conditions,
and #3 was geological crisis.
#9 on their list of triggers
was housing slowdown.
In 2008, our largest
decline in appreciation
was due to a housing slowdown
and the situation created
by the mortgage industry.
This year, we're NOT
even in the top eight!
Also, in the same survey on the same day,
they asked what about median
appreciation of housing.
All of the analysts said
that the housing prices
are going to go up, not down.
Appreciation is going to slow down,
but the prices are expected to go up
from about 2.5% to 4.1% through 2023.
Why is this important to know?
Well, we don't want to get in a panic
about buying and selling,
and become afraid that will
be like 2008 all over again.
In fact, Morgan Housel, a
well-renowned financial analyst,
said, "An interesting thing
is that the widespread
assumption that the next
recession will be as bad as 2008.
Now, it's natural to think that way,
but, statistically, highly unlikely.
It could be over before you
even realized it began".
At least that's what he thinks.
Prices and appreciation
are expected to just be more normalized.
Don't let all the hype about the recession
scare you from the dream and
benefits of home ownership.
In my opinion,
it's one of the very best
investments you can make.
According to Mark Fleming, First
American's Chief Economist,
he says, ""f the 30-year,
fixed-rate mortgage
declines just a fraction more,
consumer house-buying power would reach
its highest level in almost 20 years."
So, what does that tell us?
It tells us to not be so
caught up with all the hype.
MAKE THE MOVE! And, as always,
if you have any questions at all,
please feel free to reach out to me.
I'm Heather Witte, Owner
of The Witte Group,
your best real estate move. Take care!
