HOUSINGNEWS REPORT
RECESSION FEARS RISING: HOW HOUSING WILL HOLD UP
predicted by many industry analysts, could bring a more balanced market and ease housing demand.” Long & Foster is among the most- experienced brokerages in the country, having survived seven recessions since its founding. Recession Defenses As with past recessions it’s entirely possible we will see higher prices even if a widespread economic slowdown hits again. In the particular case of the next recession there are several reasons to believe that prices in most markets will be sustained. Unlike the 2007 recession, a slower economy is not likely to produce a wave of foreclosures. Once bought, people are staying in their homes for longer periods. Prior to 2009, the average homeownership tenure was 4.21 years, but following the crash it has steadily increased and was at 8.09 years in Q2 2018 — a new all-time high, according to ATTOM Data Solutions. People have more equity as a result of longer tenure, generally rising home prices and more time for amortization. If things get really bad, many owners can sell, pay off their debts, and keep their credit standing in place. With fewer foreclosures, home values won’t be undermined by bargain-basement prices next door. Also, the impact of toxic “legacy” loans from the 2007 recession is fading away, a significant development. In mid- 2015, as an example, the Mortgage Bankers Association reported that “73 percent of the loans that were seriously
“An economic slowdown, as predicted by many industry analysts, could bring a more balanced market and ease housing demand.”
JEFF DETWILER CEO AND PRESIDENT OF LONG & FOSTER COMPANIES
time around. What’s happened between 2008 to 2018? The owners left most of that equity untouched! Owners of real estate are sitting on the biggest equity cushion ever!“ Third, Norris argues that “lenders have taught borrowers (during the recent downturn) the new methodology of handling delinquencies. Instead of filing foreclosure, the lenders bent over backwards to avoid taking the asset back via foreclosure. Lenders were allowed to ignore delinquencies, modify loans, and work with buyers in ways they never have before. This experience is still fresh in both the lenders’ and borrowers’ mind. When a recession hits, instead of a massive increase in
foreclosure property, we’ll have an increase in delinquencies and a very patient reaction by lenders.” Jeff Detwiler, CEO and President of Long & Foster Companies, a brokerage with more than 10,000 sales associates from New Jersey to North Carolina and now part of HomeServices of America, a Berkshire Hathaway affiliate, says that “from what we see in the regions where we do business, conditions will remain relatively steady for the near-term. While every market is different, that means continued inventory shortages and pent-up buyer demand driving home prices higher – albeit at a slower rate than what has occurred over the past year. An economic slowdown, as
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AUG 2018 | ATTOM DATA SOLUTIONS
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