A recession does not equal a real estate crisis. That is the one thing that every homeowner today needs to know. Everywhere you look, experts are warning that we may be headed for a recession, and if true, an economic slowdown does not mean that homes will lose value.
O National Bureau of Economic Research (NBER) define a recession as follows:
"A recession is a significant decline in economic activity spread throughout the economy, usually visible in output, employment, and other indicators. A recession begins when the economy reaches a peak in economic activity and ends when the economy reaches its minimum. Between the valley and the peak, the economy is expanding."
To help show that house prices do not fall every time there is a recession, take a look at the historical data. There have been six recessions in this country in the last four decades. As the chart below shows, looking at recessions since the 1980s, house prices have appreciated four times and depreciated only twice, yet it should be remembered that one of the two recessions with loss of value was generated in the housing market and so it was to be expected that in this recession real estate would lose value.
So, historically, there is evidence that when the economy slows down, it doesn't mean that home values will fall or devalue.
Recession does not equal crisis in the real estate market
Price variation in the last 6 recessions
The first occasion on the chart when house values depreciated was in the early 1990s, when house prices fell by less than 2%.
It happened again during the housing crisis in 2008, when home values fell by almost 20%. Most people vividly remember the housing crisis in 2008 and think that if we fall into a recession, we will repeat what happened then.
But that the real estate market is not a bubble about to pop. The fundamentals are very different today than they were in 2008. Therefore, we should not assume that we are following the same path.
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Now that you know that even in a recession the historical data are positive regarding the real estate market in the United States you can already consider investing in vacation homes in orlando. To take advantage of all the tips we have brought to you and go even deeper, you can talk directly to our relationship agents. They are always willing to talk to you with any questions you may have about investing in Florida.
In this text we approached the theme the behavior of the real estate market during recessions because it is interesting for those looking to invest in Florida. If you want to read more content like the one we brought in this article, just stay tuned here on our blog.
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