What Do Home Values Do During A Recession?

What Do Home Values Do During A Recession?

If you’re in the market to buy a home right now you might be thinking yourself, is now a really a good time to buy a home? I mean, with everything going on, people are staying indoors, they’re social distancing, there’s less economic activity; and a lot of forecasters are predicting recession. It seems likely that we’re going to see a recession this year because of this. Now how long this drags on, we don’t know yet.

There’s a lot of unknowns with the situation, but I wanted to share with you if you’re thinking about this, what happens historically with housing during recessions. Remember housing is, is a supply and demand thing, and I’m going to share a little bit about that specifically in the Front Range after I show you this graph.

What this graph is, this is the Case-Shiller US Home Price Index, which is a nationwide survey of households of home prices that takes into account different markets across the country. And you can see here that actually in three out of the last five recessions, home prices actually went up. It was only during the Great Recession of ’08, which was the recession that was caused by housing that home values went down significantly. And if you look back at the last four, I can’t even tell which one is the one where it went down in value. They look level if anything here. That just goes to show that historically recessions don’t necessarily lead to lower home prices or home values.

On the supply and demand front, there still remains a lot less supply than there is demand for housing in the Front Range and the Denver area. If you look at housing inventory, houses for sale, a normal number is something in the 20 to 25,000 range. Right now, we have something like 3000 or 4000 listings available. Even if the number of buyers goes down significantly during this crisis, people are going to get out there and start looking again once this passes and there’s still not enough inventory to meet the demand. So unless you’re going to buy your house and move right away. If you’re going to live in your house for a while, your kids are going to go to school there, you work near there, you’re going to be in your house for three, five, 10 years, housing is historically a good investment.

That’s my take on it and what housing does during a recession. Just give me a call if you have any questions on that or need anything. My name’s RJ Baxter, Fairway Independent Mortgage. Have a great rest of your day, and stay safe and stay healthy out there.