- With talk of the coming recession,
does that mean a housing
crash in the Inland Empire?
Will it be as bad as 2008?
Stay tuned, because we're going
to let you know the truth.
That's coming up next.
- We're Glen and Kelly Nelson
with Realty One Group West.
And today we're going to
tell you what you can expect
for housing with the upcoming recession.
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- Today, everyone is struggling
with the recent market
correction in mid-August.
And what it means for housing.
Should we sell?
Should we buy?
Will the recession be as
bad as the Great Recession?
Today, we're going to answer the questions
about what to expect with
housing in the near future.
Headlines after the mid-August correction
raise the R-word, recession.
- Now, what is the
definition of recession?
Miriam-Webster describes it as a period
of temporary economic decline,
during which trade and
industrial activity are reduced,
generally identified by a fall of GDP,
or Gross Domestic Product,
in two successive quarters.
Four major surveys were recently done
involving Duke University,
Wall Street Journal,
National Association
of Business Economists,
and Pulsenomics, which
involved 100 market analysts.
- Each survey asked, "When
will the recession begin?"
Of all four surveys, 67% said between now,
and the end of 2020.
Will we have another great recession?
We'll explain later.
But the answer is no.
- Warren Buffet in 2018,
looking back at the 10-year anniversary
of the 2008 recession, quote,
"Fear spread like a tsunami in 2008."
Former Fed chairman Ben Bernanke
in 2018, also looking back,
said, quote: "My results do suggest that,
"In the absence of the panic,
the declines in employment,
"consumption and output
at the early stages
"of the great recession would have
"been significantly
less severe." End quote.
We must control the fear.
A recent Realtor.com survey of buyers
shows that 57% believe
that the coming recession
will be as bad or worse than 2008.
- Keep in mind that a recession
does not equal a housing crisis.
We're in the longest recovery
in American economic history.
And a slowdown is to be expected.
But housing prices don't
always go down in a recession.
In 3 of the last 5 recessions,
home prices went up.
In 2001, stocks dropped 25%,
yet prices went up 6.6%.
What will trigger the next recession?
- Pulsenomics survey
of 100 market analysts
showed the top 3 triggers
being trade policy,
stock market correction,
and geopolitical crisis.
A housing slowdown was
number 9 on the list.
In 2008, the mortgage industry
was the number 1 cause.
- What will the recession
do to home prices?
- The home price expectation
survey projects appreciation
of 4.1% in this year, 2.8% in 2020,
2.5% in 2021, 3% in
2022, and 3.4% in 2023.
No declines, only
moderation of appreciation
during the expected time of the recession.
- If home prices are going
up, what about affordability?
Everyone is thinking
it's not as affordable
as it was 10 years ago.
Remember right after the bust,
when interest rates
dropped to all-time lows,
and prices dropped dramatically?
- The National Association of Realtors'
Housing Affordability Index
measures from 1990 to 2019.
The higher the number on
the affordability index,
the more affordable homes are.
As you can see,
affordability is better now,
than in 1990 to 2008.
- The National Association of Realtors
analyzed mortgage payment
as a percentage of income
from last June to June of 2019.
The historic norm is 21.2%.
June 2018 to June 2019, the norm was lower
than the historic norm,
and is trending downward.
- Mark Fleming, the first
American chief economist
said quote, "If the 30-year
fixed-rate mortgage declines
"just a fraction more, consumer
housing house buying power
"would reach its highest
level in almost 20 years."
- But what about the Inland Empire?
- For Temescal Valley, Riverside,
and Corona specifically,
the largest number of homes
pending over the last 6 months
has been in the 400,000 to 500,000 range.
The average days on
market over that period
has been below 30 days, and
inventory is under 4 months.
- Homes are more affordable
in the Inland Empire
compared to Los Angeles and Orange County.
The amount of home for the dollar
is better than LA and OC combined.
With lower taxes and no
Mello-Roos in some areas,
homes are more affordable.
Homeowners Association dues
are between 65 to 130 dollars,
as compared to OC and LA.
- We are going to have a recession.
But housing won't be the cause.
Housing prices will moderate,
but continue to appreciate.
Affordability is excellent.
So, don't panic, but know
that a slowdown is normal,
and not to be feared.
Remember that panic and fear
fueled the Great Recession.
- For more information on
buying or selling your home
in today's market, and the truth
about the coming recession,
be sure to get our newest
free home sellers guide
and home buyer's guide.
Just click the link in
the description box.
- Thank you for watching.
And be sure to like this
video and leave a comment.
And don't forget to
subscribe to our channel.
And we will see you next time.
