Last year, in Zillow’s Q2 2018 Home Price Expectations Survey conducted by Pulsenomics LLC, nearly 50% of more than 100 housing experts and economists predicted that the next recession would begin most likely in Q1 2020.
At that time, these experts pointed to the Federal Reserve’s monetary policy as the likeliest cause of such an anticipated recession unlike in 2017 when these same experts thought a geopolitical crisis would tip the scales. Today, however, trade policy, unexpectedly high inflation and/or a major correction in the stock market could get center stage.
Two telling realities remain constant over these few years. The current economic expansion is now the longest economic expansion ever recorded. And, housing affordability (or rather lack of affordability) remains central to the housing market.
According to Aaron Terraza, Zillow’s chief economist, “Housing affordability is a critical issue in nearly every market across the country, and while it remains unknown as to the precise path of the US economy in the years ahead, another housing market crisis is unlikely to be a central protagonist in the next nationwide downturn.”
The monetary policy that concerned these experts and economists last year was the Fed’s decision to raise interest rates. That policy, however, is likely to do an about face in the near future. Jerome Powell, the Federal Reserve’s head, has “hinted” that the Fed may well reduce interest rates at its upcoming July meeting and may continue doing so at subsequent meetings.
Whatever the primary catalyst to a whenever next recession, housing experts and economists agree that housing will not be central to any anticipated recession. On the contrary, experts agree that the housing market will continue to show strong appreciation.
According to Pulsenomics’ founder Terry Loeb, “Constrained housing supply, persistent demand, very low unemployment and steady economic growth have given a jolt to the near-term outlook for US home prices.”