Recession for Real Estate?
In early June, the National Bureau of Economic Research (NDER) announced that the U.S. economy is officially in a recession. The Bureau defines a recession as:
“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.”
The pandemic shut down the country, causing a “a significant decline in economic activity.” Our present circumstance has made many folks remember the recession of 2008-09 and the devastating impact it had on the housing market. The real estate market, however, is in a totally different position than it was back then. Mark Fleming, Chief Economist at First American states:
“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.”
A June 10, 2020 article by Keeping Matters Current asserts that the reason we are in a different position than last time are four major differences in today’s real estate market:
- 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.
In Granite Bay and surrounding areas we are definitely seeing a lack of inventory. This situation is creating strong listing opportunities for those who wish to sell their homes. Realtors in the area are seeing a big surge of buyers from the Bay Area since Coronavirus and in many cases because of it. Buyers, on the other hand, continue to enjoy low interest rates. Though it is not necessarily easy to get a loan (many lenders are requiring stringent qualifying terms), those who qualify have strong buying power.
Yes, we all learned a lot from 2008-09. And hopefully one thing we learned was to be more strategic in our decision-making. Save, invest wisely, and when selling or buying a home, seek out a real estate expert who is savvy in your market!
Debbie Austin is a realtor associate with Keller Williams, Roseville and has been helping clients buy and sell property in the area for 16 years. If you have a specific real estate question you wish to see addressed, contact Debbie at debbieaustin@kw.com or debbieaustingroup.com.
