Zillow’s 2018 Home Price Expectations Survey revealed a troubling timeline for the next recession, as more than half the experts who participated in the study said they believe the next recession will begin in 2020 and a fifth of those stating it will begin early that year. About a quarter of participants predicted the economic downturn will come even earlier, in 2019. The analysts cited “monetary and trade policies” as likely causes for the downturn, and, on a positive note for real estate investors and homeowners alike, said they did not expect a housing crash to trigger the next economic downturn.

Interestingly, study participants were not particularly concerned about how monetary policies would affect residential lending standards. More than half said current mortgage underwriting standards are “just about right, neither too tight nor too loose.” However, they did express concern about lending standards, noting that the “best borrowers” with stellar credit have good access to credit, but the remainder, with “less-stellar credit histories” and low credit scores or needing low down payments, may struggle to obtaining home financing.

Most analysts also agreed homeowners planning to sell should do so in the next 24 months, before the downturn begins. Because a recession tends to bring job loss, housing markets will likely cool during a recession. “Any time there are widespread job losses, particularly if these job losses are protracted, the housing market softens even if the housing market is not the central cause of most prominent casualty of the downturn,” warned Zillow senior economist Aaron Terrazas. He added, “The spillover to the housing market will depend on the depth, length, and severity of the next recession.”

Investor Insight:
The analysts said the most likely trigger for the next recession is monetary policy and predicted housing appreciation will slow as the end of the decade approaches.

Categories | Article | Market & Trends
Tags | Economy
  • Carole VanSickle Ellis

    Carole VanSickle Ellis serves as the news editor and COO of Self-Directed Investor (SDI) Society, a membership organization dedicated to the needs of self-directed investors interested in alternative investment vehicles, including real estate. Learn more at SelfDirected.org or reach Carole directly by emailing Carole@selfdirected.org.

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