There Won’t Be a Recession That Tanks the Housing Market

There’s been a lot of recession talk over the past couple of years. And that may leave you worried we’re headed for a repeat of what we saw back in 2008. Here’s a look at the latest expert projections to show you why that isn’t going to happen.

According to Jacob Channel, Senior Economist at LendingTree, the economy’s pretty strong:

“At least right now, the fundamentals of the economy, despite some hiccups, are doing pretty good. While things are far from perfect, the economy is probably doing better than people want to give it credit for.”

That might be why a recent survey from the Wall Street Journal shows only 39% of economists think there’ll be a recession in the next year. That’s way down from 61% projecting a recession just one year ago (see graph below):

Most experts believe there won’t be a recession in the next 12 months. One reason why is the current unemployment rate. Let’s compare where we are now with historical data from Macrotrends, the Bureau of Labor Statistics (BLS), and Trading Economics. When we do, it’s clear the unemployment rate today is still very low (see graph below):

The orange bar shows the average unemployment rate since 1948 is about 5.7%. The red bar shows that right after the financial crisis in 2008, when the housing market crashed, the unemployment rate was up to 8.3%. Both of those numbers are much larger than the unemployment rate this January (shown in blue).

But will the unemployment rate go up? To answer that, look at the graph below. It uses data from that same Wall Street Journal survey to show what the experts are projecting for unemployment over the next three years compared to the long-term average (see graph below):

As you can see, economists don’t expect the unemployment rate to even come close to the long-term average over the next three years – much less the 8.3% we saw when the market last crashed.

Still, if these projections are correct, there will be people who lose their jobs next year. Anytime someone’s out of work, that’s a tough situation, not just for the individual, but also for their friends and loved ones. But the big question is: will enough people lose their jobs to create a flood of foreclosures that could crash the housing market?

Looking ahead, projections show the unemployment rate will likely stay below the 75-year average. That means you shouldn’t expect a wave of foreclosures that would impact the housing market in a big way.

Demand is still strong, and inventory levels are stable

You can see in this chart below, the level of active homes for sale is fairly stable, across all price ranges.  New listings enter the market each day.

The buyer demand for the listings shows in the pending sales chart here, the lines are pretty close. Homes come on the market, and they sell fast.

There isn’t much to be afraid of

There won’t be a wave of homes for sale that outpaces demand.  Most experts now think we won’t have a recession in the next year. They also don’t expect a big jump in the unemployment rate. That means you don’t need to fear a flood of foreclosures that would cause the housing market to crash.  The last crash is reflected in the chart below and shows you what happened to home values nationwide. While the numbers dipped, it was not for long, and they bounced right back. Not only will there not be a housing market crash, but even if we’re wrong, appreciation will bring values right back and then continue at a much more normal pace, as it has in the past.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bottom line. Opportunity is everywhere.

Supply and demand remain balanced, so what you can expect for 2024 is pretty much what you saw in the last two years.  We helped a lot of people find success buying, and selling, in these last few years, just like we did in the years before then.  Don’t bother waiting to try and “time the market”, lets talk about what you want, then we’ll help you decide if now is the time for you.   Will you compete as a buyer?   Yes. Will you find lots of buyers wanting your home when you sell?   Yes.   No matter what you want to do, opportunity is there for you.

When you’re ready to talk, we’ll be here.  Give us a call or text at (717) 371-0557!

Your Friends in Real Estate,

Jason Burkholder Team

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Jason Burkholder

Kelly Burkholder

Jaci Hoosier

717-371-0557 direct or text

Hometown Property Sales Group, LLC

717-207-8093 office

57 E Main St

Lititz, PA 17543

Real Estate Market Myths in 2023

Ok friends, let’s shine the light on a couple myths floating around out there regarding the real estate market right now.  There’s no denying that it’s a different market, and sometimes conflicting signals.  But that’s kinda the case every year, and misconceptions floating around about this market, coupled with  people filling airtime trying to “predict” what’s going to happen next aren’t making things any easier.

So what, exactly, are those misconceptions, and why are they incorrect? Let’s discuss some of the common myths in today’s housing market that are hurting both buyers and sellers, including:

• Owners with low mortgage rates will never sell. Many buyers that purchased a home a few years ago locked in record low interest rates on their mortgages. And with interest rates significantly higher today, there’s a belief that those homeowners will never give up their low interest rates and sell. But the truth is, there are a ton of life circumstances that could force a person to list and sell their home — like a new job, growing family, or change in their financial situation — no matter what kind of interest rate they have on their mortgage.  Mortgage rates don’t play a role in what people want, they play a role in what people can afford.
• “High Interest Rates” are keeping people from buying.  No, they aren’t. In Lancaster County, closed sales are up 25%, check out our last Market Update to see those stats.
• As rates go up, home prices will go down, so I should wait. Many buyers believe that as interest rates rise, home prices will fall — and, as such, they’ve been waiting to make a move until prices are more affordable. But the relationship between interest rates and home prices is impacted by a variety of factors, including demand and available inventory, and the “prices will fall as rates rise” belief just hasn’t been true in this market.  The demand is still outpacing the supply, and even so, lots of people are successfully buying homes!  Don’t expect this to change anytime soon, prices aren’t coming down.
• The market is about to crash, just like in 2008. The prices and fierce competition in today’s market are reminding some people of the conditions before 2008. But today’s market lacks the fundamental issues that caused the 2008 crash, including bad lending practices (they were legislated out), and the majority of homeowners had little to no equity in their home back then. The recent rise in prices was driven by completely different factors — including generational trends, more than a decade of under building housing, and demand outpacing inventory — making a similar crash highly unlikely.  How can I be sure?  Well, how about this next point.
• Mortgage defaults are at the lowest rate in 23 years.  All time, historically low.  According to Core Logic, default rates (people not paying their mortgages) was only 1.1% of mortgages.  People have jobs, they are sitting on tremendous equity, they didn’t take risky loans to buy, and there simply isn’t going to be a “wave” of foreclosures.
• Home owners have lots of equity.  ATTOM Data recently put out a report that says 49% of US homeowners are “equity rich”.  This means, again, it’s a great time for them to sell, and most people selling now are able to use that equity to easily move up, or move down, or simply cash out and use the money elsewhere.  Prices are stable, and rising, at a much more sustainable pace this year versus prior years.

So, what does it all mean for you?  Exactly what we have been saying. Now is a good a time to buy, or sell, as any.  People move because they want to, or need to, and despite headlines to the contrary, yes you can buy.  We are helping people do it all the time.  We can help you too.  Let’s talk about it.

Looking to sell or buy anywhere in Central Pa?  Call 717-371-0557!

Your Friends in Real Estate,

Jason Burkholder Real Estate Team

Jason Burkholder

Kelly Burkholder

Adam High

Jaci Hoosier

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Jason Burkholder

AB066232

717-371-0557 direct or text

Associate Broker

Realtor, e-Pro, RENE, AHWD

Certified Marketing Specialist

C2EX Endorsed, Certified Ally

Jason Burkholder Real Estate Team

Welcome Home Real Estate

717-298-8040 office

57 E Main St

Lititz, Pa 17543

www.JasonsHomes.com