By now, you’ve seen it in the headlines.
July marked the 121st consecutive month of economic growth, the longest expansion in U.S. history, according to the National Bureau of Economic Research.
While this is great news, we all know that what goes up must come down. The economy, much like the housing market, fluctuates. Even though the economic recovery is continuing today, we can’t escape predictions of when the next recession will take place – and many experts are saying it will be soon.
Economic experts are predicting the next recession will take place within the next 18 months, with most believing 2020 will be the year we see the change take place.
If you were around for the recession of 2008, this might make you nervous about what will happen to home values this time around. Taking a look at the data of the past five recessions, dating back to 1980, we see that home values are not always negatively impacted during a recession.
How will the next recession impact home values?
In 2008, the Great Recession was fueled by a mortgage crisis. Because of this, home prices dropped 19.7%, a staggering amount.
However, during the recessions of 1980, 1981, and 2001, home prices went up, as much as 6.6%. The only other year that home prices dropped during a recession was in 1991 – and that was just 1.9%
A Recession does not equal a Housing Crisis
People are remaining confident in the housing market, even with a looming economic slowdown.
Many different economic factors can trigger a recession. In 2008, it was a mortgage crisis, which, as we know, greatly impacted the housing market. This time around, however, it is unlikely that housing will be a driving force.
In a survey conducted by Zillow, panelists were asked to select the factors that would most likely contribute to the looming recession. Housing was among the least likely causes, while trade policy, a geopolitical crisis, and a stock market correction were among the top three.
Are you interested in learning what the value of your home is worth in today’s market?