Excluding the Great Recession, a study of 1,039 state-level recessions since 1997 showed that home values remained as high as they had ever been.

 

[mpc_textblock content_width="100"]Excluding the great real estate recession of the late 2000s, the house values continued to rise during national and state recessions over the last 25 years, according to a new analysis.

The US has achieved its greater economic expansion of all time this summer, although growth is slowing. A recent survey sponsored by Zillow and conducted by Pulsenomics LLC found that a panel of housing experts and economists expect the next recession to begin in the third quarter of 2020. Demand for housing is expected to cool during the next recession, but few believe that the housing slowdown will be a significant factor in causing it.[/mpc_textblock]

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[/mpc_alert][mpc_icon_column title_font_color="#e4246c" title="Analysis of past recessions"]As some market observers predict a recession on the horizon, an analysis of recessions in the recent past shows that they generally have a limited effect on the real estate market. In the last 23 years, there have been two national recessions - the dotcom crash from March to November 2001 and the Great Recession from December 2007 to June 2009 - and several state or regional recessions.

Home values fell widely across the country during the Great Recession, but in most other cases annual home value growth remained positive.

Excluding the Great Recession, there have been 1,039 cases since 1997 of states in recession during a given month. Annual home value appreciation was positive 81% of the time in those months - identical rate to the months when states were in economic expansion. Appreciation averaged 4.6% during economic growth and 4% during recessions. This indicates that while recessions have an impact on the real estate market, the widespread collapse in home values during the Great Recession is a point outside the curve.

economy in the united states

The real estate market is simply much less risky than it was 15 years ago

"The housing crash during the Great Recession left a lasting impression on our collective memory," said Zillow economist Jeff Tucker. "But as we look ahead to the next recession, it's important to recognize how unusual the conditions were that caused the last one and what's different about the housing market today. Instead of abundant housing, we have a shortage of supplies for new homes. Instead of borrowers taking out adjustable-rate mortgages, we have buyers with genuine credit scores taking out predictable 30-year fixed-rate mortgages. The housing market is simply much less risky than it was 15 years ago, and our experience in recent local recessions shows how house prices can withstand normal economic winds."

As an example, several states with large energy sectors - Alaska, Louisiana, North Dakota, Oklahoma and Wyoming - suffered local recessions from 2015 onwards when oil prices fell dramatically. Home value growth was positive year on year in all five states and only Alaska turned negative month on month during this period - the biggest monthly loss in value for the average home in Alaska was 700 dollars.

Across the country, annual housing value growth averaged 4.3% during these months of recession, compared to average growth of 5.2% in the months of economic expansion in 2015 and 2016.

Source: Florida Realtors
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In this text we address the topic the behavior of the real estate market during recessions because it is interesting for those looking for invest in Florida. If you want to read more content like what we've brought you in this article, just stay tuned here at our blog.

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