Is a Recession the Same as a Housing Crash?
Many people who plan to buy or sell a home in Albuquerque fear that as we head into a recession, that this will lead to a housing crash. But will that be the case with this recession? The thing to keep in mind is that a recession and a housing crash are two different things.
What is a recession?
The National Bureau of Economic Research defines a recession this way:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
The Coronavirus restrictions hit the American economy in March. According to Goldman Sachs, JP Morgan, and Morgan Stanley are all indicating that there will be a deep dive in the economy in the second quarter of this year.
Does that mean we’re headed for another housing crash?
Home buyers and sellers in Albuquerque and around the nation fear that we're going to see a repeat of the housing crash that happened during the Great Recession of 2006-2008. Yet if we look at past recessions, we can see that most do not impact home values adversely.
Doug Brien, CEO of Mynd Property Management, explains:
“With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 1990-1991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.”
What are the experts saying this time?
This is what three economic leaders are saying about the housing connection to this recession:
Robert Dietz, Chief Economist with NAHB
“The housing sector enters this recession underbuilt rather than overbuilt…That means as the economy rebounds – which it will at some stage – housing is set to help lead the way out.”
Ali Wolf, Chief Economist with Meyers Research
“Last time housing led the recession…This time it’s poised to bring us out. This is the Great Recession for leisure, hospitality, trade and transportation in that this recession will feel as bad as the Great Recession did to housing.”
John Burns, founder of John Burns Consulting, also had this to say, based on his firm's research:
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”
What does all this mean for home buyers and sellers in Albuquerque? It means that if you had plans to buy or sell a home in Albuquerque before the pandemic, there's no reason to derail your plans. These are uncertain times for sure. The Sandi Pressley Team is adapting to these changing times and are ready to help you realize your real estate goals. Contact us today to see how we can help you continue on your plans to buy or sell a home in Albuquerque today.
Contact us today to help you buy or sell your next home in Albuquerque. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.
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