Real Estate 2020
What do the Experts Say About the Real Estate 2020 Future?
Will the real estate market be impacted like it was during the mortgage crisis recession of 2008?
Remember, a recession does not equal a housing crisis. According to the dictionary definition, a recession is: “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.”
During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren't negatively impacted:
January 1980 to July 1980: Home values rose 4.5%
July 1981 to November 1982: Home values rose 1.9%
July 1990 to March 1991: ome values fell less than 1%
March 2001 to November 2001: Home values rose 4.8%
Even back in the mid-1800s, people knew that negative news sells. That is still true today. All forms of media realize that they will get more eyeballs, clicks, likes, and engagement by posting something negative. However, they must realize that negative headlines impact markets. Even today, good news is headlined with a negative spin in order to get attention. Here are two recent examples from mainstream media: Actual Headline #1: Cash-out refis are back – will homes become ATMs again?
The real story: The headline is accurate – to a point. It is true that the percentage of refinances in which the homeowner received cash at the closing has increased to levels that existed in 2006. However, the actual amount of equity homeowners “cashed-out” compared to a decade ago isn’t close. The dollar amount cashed-out last year was $63 billion. That seems like a really large number until we compare it to 2006, when homeowners cashed-out $321 billion. That is more than five times the current amount.
So, perhaps Sun Valley won't see the 7.2% to 9.2% appreciation of the past year, but it won't see the 2008 drop in real estate values either. Most experts agree with McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:
“There is no reason to panic even if we may be headed for a recession. Were seeing a cooling of the housing market, but nothing that indicates a crash.”
The housing market is just “normalizing”. As renowned financial analyst, Morgan Housel recently tweeted:
“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.”
Scarcity creates appreciation = rising prices. Currently, the Sun Valley market does not have sufficient inventory to meet demand so prices are rising.