A scary word has been popping up in the news a lot lately: recession. Though there’s a good reason to be worried when people start throwing the term recession around, we probably shouldn’t panic just yet. Many experts believe that the impending recession won’t be nearly as bad as the one in 2008 and that the housing market, in particular, is in a much better position than it was back then. What could a recession mean for the real estate market though? There has to be some type of repercussion, right? Read on to find out more.
Will Home Prices and Sales Fall?
The simple answer is no. If you’re waiting for home prices to crash to buy a come, you’re probably wasting your time. At the moment, there aren’t enough homes being built in the United States in order to satisfy every buyer in the market. On top of that, more millennials are looking to buy homes in order to raise families, so demand will likely remain as-is if not grow over time. But while prices likely won’t fall, the housing shortage still has the potential to become worse. Potential sellers might decide to hold off on listing until they can get prices they’re happy with. And even though a lack of homes typically increases prices, this is less likely to happen due to fewer people being able to afford to buy during the recession.
Could Rentals Become Cheaper?
As with home prices, rentals are not likely to fall in price. Experts such as Greg Willet feel that there will be a small impact but nothing to write home. Instead of apartment prices increasing 3% annually, Greg believes they’ll slow to 1.5% or 2% over the next few years. The reason for this is because there will likely be a buffer due to individuals being wary about purchasing a home in uncertain economic times. Of course, there are always exceptions. The luxury rental market may suffer, and developers may have to lower prices or offer free months rent if they want to attract higher-end tenants.
Will There Be Another Foreclosure Crisis?
During the Great Recession, forclosed homes were commonplace. Luckily, foreclosures aren’t likely to be as prominent this time around. Due to the housing bubble bursting, lending laws were improved and only the most qualified borrowers are able to get their hands on a mortgage. Lawrence Yun of the National Association of Realtors feels that the big difference between this recession and the Great Recession is that this time bad mortgages won’t be the problem, but instead, people losing their jobs will be. Regardless of this, foreclosures will likely increase during the recession if only for the fact that foreclosures are currently at an astronomically low number.
With a possible recession coming, there are probably many things you might be worried about. Luckily, real estate is one area that you shouldn’t have to think about too much.