Recent searchshows that more and more Americans andare worried about a possible recession. These concerns were validated when the Federal Reserve met and confirmed that it was strongly committed to reducing inflation. And, to that end, would use their tools and influence to slow down the economy.
All this brings many fears and questions about how this might affect our lives, our jobs, and business in general.
And one concern that many Americans have is:
how will this affect the real estate market?
We know how the economic slowdowns have affected house prices in the past, but how might this coming slowdown affect real estate and the cost of financing a home?
According to with mortgage specialists (real estate financing):
"Throughout history, during a recessionary period, interest rates rise at the beginning of the recession. But to get out of a recession, interest rates are lowered to stimulate the economy going forward."
Here is the data to back that up. If you look back over each recession until the early 1980s (the last 30 years of history)Here is what happened to mortgage rates during these periods (see the chart below):
Financing Rates and the American Recessions
As the chart shows, historically, each time the economy slowed, mortgage rates decreased. Fortune.com help explain the trend as follows:
Some error has occured.
"In the last five recessions, mortgage rates have fallen by an average of 1.8 percentage points from the peak seen during the recession to the valley. And in many cases, they continued to fall after the fact, because it takes some time to turn things around, even when the recession is technically over."
And while history does not always repeat itself, we can learn from it. We understand that an economic slowdown needs to happen to help reduce inflation, it has not always been a bad thing for the housing market. It usually means that the cost to finance a home has dropped, and that is a good thing.
In addition we need to analyze that the impact of the recession is not uniform across all geographies, today for example Orlando continues to have a very small inventory of homes for sale, although it has increased to almost two months it is far below the 6 months of inventory of homes for sale considered a market break-even point and still far below the peak of the last great recession which was 24 months.
Our understanding is that Orlando will be very little affected by this interest rate hike just a slight market accommodation.
Are you in doubt?
Now that you know how interest rates behaved before and after a recession in the United States you can 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 happy 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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