How likely is a recession in 2020? This is the question of the hour. It’s on everyone’s mind. Hello, I’m David Novak with RE/MAX Professionals. We need to remember that next year is a presidential election year and probably one of the most controversial elections yet. There’s going to be a lot of questioning and political debates about the economy, why is it so good and questioning if our economy is going to decline. So this is going to stir up a lot of hype. There have been four major surveys this year, 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% believe that we will see a recession by 2020. Why do we think this is? We have been in the longest recovery in American history, so we should expect to see a slowdown. The GDP will slow down, but let’s look up the Webster’s Dictionary definition of a recession, “A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a falling gross domestic product in two consecutive quarters.” We need to remember that recession does not mean housing crisis. In three of the last five recessions, housing prices actually increased during the recession. Obviously, 2008 was the most drastic. Now in the same survey from Pulsenomics, they asked if they anticipated a recession. They also asked in the same day, at the same time, the same exact survey, the same analysis, they were asked, “What would trigger the recession?” Number one was trade policy, number two was stock market conditions and number three was geological crisis. Number nine on their list of triggers was housing slowdown. In 2008, our largest decline in appreciation was because of a housing slowdown and the situation in 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 the median appreciation of housing?” All the analysts said that the housing prices are going to go up, not down. Appreciation is going to slow down, but the prices are still going to be going up everywhere from about two and half to 4.1% through 2023. Why is this important to know? We don’t want to get in a panic about buying and selling and become afraid that it will be like 2008. 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. Natural to think that way, but statistically highly unlikely and could be over before you even realized it began.” Prices and appreciation are expected to just be more normalized. Don’t let all the hype about a recession scare you from the dream and benefits of home ownership. In my opinion, it’s one of the best investments that you can make. According to Mark Fleming, First Americans chief economist, he says, “If 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, feel free to reach out to me today. I’m David Novak with RE/MAX Professionals and I hope you have a great day.
