The Housing Market Reflects Resilience to Recessions

Considering the unpredictability of the stock market and improbability about the Coronavirus (COVID-19), some are concerned we may be headed for a housing crash similar to what we experienced in 2008.

According to San Diego Association of Realtors and First American Title Company, it’s unclear when the next recession will come. But when it does the U.S. housing market is unlikely to be adversely affected in any major way.

Researchers at First American, examined how the country’s housing market has fared historically during recessionary periods. Based on what’s happened in past recessions, the report argues that the next recession is unlikely to prompt a major downturn in housing.

Unlike 2008, the housing market today is not driven by homeowners who are highly leveraged, as shown by the fact that the household debt-to-income ratio is at a four-decade low. Additionally, the housing crisis in the Great Recession was fueled by the fact that job loss was paired with a significant share of homeowners who didn’t have much equity in their homes.

In fact, the housing market may actually aid the economy in recovering from the next recession – a role it has traditionally played in previous economic recoveries.

BUYERS: Some home buyers will press ahead and benefit from incredibly low interest rates. If you want to buy, now is a good time to pull your paperwork together for a pre-approval.

SELLERS: If you want to sell, now’s a good time to start the paperwork with your Realtor. You can work on decluttering and organizing your home. You can line things up so that the pre-sale inspections and photography can happen as soon as you get a green light.

Remember, real estate allows you to control your risk because you can actively participate in the decision-making process. Passive investments such as stocks don’t give you this opportunity.

Bottom Line: Historic low interest rates trump the coronavirus fears. People are going to continue to buy and sell real estate.