It’s hard to remember sometimes that every market has its ups and downs. The stock market recently celebrated its 9th consecutive year of bullish-ness as has the real estate market. Of course not everyone has benefitted equally from these bull markets (first time home buyers are finding it difficult to even enter the housing market) but at nine years old, it’s safe to say these bull markets are aging gracefully.
When will this graceful aging come to an end? Zillow along with Pulsenomics LLC, an independent economics research and consulting firm, polled 100 top economics experts to find out. Nearly 50% of those 100 experts said that Q1 2020 would be D-Day, or the beginning of a next recession.
(To calm your heart rate, know that a recently published survey of Fortune 500 CEOs is more optimistic than the Zillow/Pulsenomics findings. The Fortune 500 survey indicated that 63% of business leaders expect a next recession in 3 or 4 years from now. The other 34% of business leaders anticipate a recession in 1 to 2 years.)
Back to the Zillow/Pulsenomics data and additional comments to help calm your heart rate. Aaron Terrazas, Zillow’s senior economist, believes that a recession, whenever it comes, is unlikely to be accompanied by a housing market crisis like the one the country experienced in 2008.
“As we close in on the longest economic expansion this country has ever seen (actually, it’s the second longest economic expansion according to the majority of market experts), meaningfully higher interest rates should eventually slow (but not stop) the frenetic pace of home value appreciation that we’ve seen of the past few years, a welcome respite for would-be buyers.”
Experts predict that the housing market’s strong appreciation will continue. Anticipated values are expected to gain +5.5% in 2018 and the median home value is predicted to hit $220,800. Both expected data points are higher than the +3.7% appreciation gains predicted in 2017.
Why will the housing market not suffer from a potential recession whenever it comes as it did in 2008? Terry Loebs, founder of Pulsenomics, said, “Constrained housing supply, persistent demand, very low employment and steady economic growth have given a jolt to a near-term outlook for US home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetites of prospective homebuyers.”