Real Estate and ecomic experts are finally admitting that we are in a recession. So far in Arizona real estate we are still seeing low inventory, low interest rates. The economic experts believe real estate will help the Arizona economy recover. Main reason shown on this blog post, is that the average home sale adds 89k to the Arizona economy.
Here is a view of what the Real Estate Experts think about the state of Real Estate now:
On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:
“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”
Everyone sees that the experts now realize that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”
Though not surprising, headlines announcing the U.S and Arizona is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.
The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First American, explained:
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”
Four major differences in today’s real estate market are:
- Families have large sums of equity in their homes
- We have a shortage of housing inventory, not an overabundance
- Irresponsible lending no longer exists
- Home price appreciation is not out of control
We must also realize that a recession does not mean a housing crash will follow. In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.
Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.
Thinks change fast. Can you imagine if Rates went up from 3.5 to 6 over the next few weeks/months. Inventory would go up, Refinances would slow down, we would switch to a buyers market. Homes would be on the market for months if not placed up for sale correctly. We can't control the market!
Thinking about selling, or buying a home? We can help!
Call Scott 623-293-2833
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