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Most news, is unsettling regarding an impending recession, however, a recession does not always equal a housing crisis. Major housing market indicators have shown some volatility as we are seeing signs of inventory rising combined with interest rate hikes; begging the question is this a correction and not a crisis? My NC Homes explores why a recession does not necessarily equal a housing crisis.
History of Housing Market and Recession
We are in a different supply and demand period. In the past five recessions, home prices typically remain stable. During the Dot-Com recession in 2001, prices grew 6.6 percent. During the 1980 and 1981 recession, prices grew by 6.1 percent and 3.5 percent, and the dips in prices were relatively small, being 1.9 percent drop during the 1991 recession, compared to a 19.7 percent price drop during the Great Recession.
Demographics
We regularly write blogs on buyer trends within The Research Triangle market and the data from Core Logic echoes what we continue to see, that the majority of buyers continue to be millennials. The United States is expected to support prime-household growth for over the next two decades and with roughly half of the population under 38 years old, which is a peak age to enter the real estate market, we expect there to be sustained demand for housing. The Harvard Joint Center for Housing Studies estimated Millennial households will grow by 32 million over the next twenty years.
Inventory and Demand
The low inventory nationally and locally in The Triangle is very important because The Great Recession where housing depreciated nearly 20% was typified by a surplus of inventory. Right now, total single-family inventory, which includes new and existing homes is at just 15.7 homes per 1,000 household. Inventory is slightly up from 14.9 per 1,1000 in December 2017. With such constricted inventory, combined with the continued inflow of people into the Research Triangle market, prices are unlikely to fall substantially.
As inventory remains constricted, interest rates increasing to protect against inflation, and the demographics supporting home buying, we are not alone in our estimation of the health of the housing market. Were conditions similar to other recessions, we also would issue warnings or reports on how to protect your investments. What we are recommending is that sellers take advantage of the market. Buyers, who are acting fast and using reputable agents are still getting good prices, but sellers continue to have the advantage in this market. If you have considered selling in the past five years, we strongly encourage you to see what your home is worth on this market. Click Here to see and contact My NC Homes today.
Posted by Larry Tollen on
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