Arizona Market Update: Recession May Be Coming But Housing Will Be Stronger Than Ever
With the erratic behavior of the stock market in the last couple of weeks, we’re hearing lots of talk about the oncoming recession:
Recession is a frightening word, but let’s remember, a recession does not equate to a housing crisis.
We are currently in the longest economic recovery in American history, so of course there will be a slowdown coming. A recovery cannot last forever. Unfortunately, the memory and pain of that last recession is still real for many people. But the drop in home prices during that time was related more to panic and financial industry practices that no longer exist than to anything else. If we look at the previous four recessions, three of four times prices went up, twice almost double the normal historical average and the other time, prices dropped by less than 2%. Since 2015, prices have appreciated yearly between 4% and 8% in the Valley. Historical averages are between 3 and 4 percent. So yes, we’re due for a shift- but that’s in the deceleration of the appreciate rate, not a reduction in prices.
There is uncertainty. Next year there is a presidential election that looks to be the most contested election in our nation’s history. We’re going to hear lots of fear mongering servied up by both sides and much of the conversation focus will be on the economy. Don’t buy into the fear. Both Warren Buffet and Ben Bernanke cited fear as a major factor in the severity of the 2008 recession.
Recession does not equal housing crisis. When it’s time for you and your family to make a move don’t let fear hold you back. It’s a great time to sell and it’s a great time to buy because even with a potential recession coming, prices will not likely drop anytime in the near future.