HOUSINGNEWS REPORT
RECESSION FEARS RISING: HOW HOUSING WILL HOLD UP
Q2 2018 HOME PRICE APPRECIATION HEAT MAP HOME PRICE APPRECIATION ACCELERATING OR DECELERATING? ACCELERATING DECELERATING
“I feel that there will be a recession by late 2019-early 2020 … What makes this impending recession most interesting is the fed fund rate will stand at 3 percent or less when the easing begins. If the Fed lowers rates as aggressively as they normally do, we could end up in negative interest rate territory and have a 30-year loan that starts with 2 percent!”
BRUCE NORRIS PRESIDENT, THE NORRIS GROUP REAL ESTATE INVESTING COMPANY
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Commission, “were neither bumps in the road nor an accentuated dip in the financial and business cycles we have come to expect in a free market economic system. This was a fundamental disruption — a financial upheaval, if you will — that wreaked havoc in communities and neighborhoods across this country.” In terms of real estate prices, typical home values on a cash basis reached $223,570 in December 2007 and fell to $192,445 by June 2009. This was the largest price decline of the five most- recent recessions. By January 2012 home values reached $173,949 and did not recover until May 2015 when cash prices hit $223,874. Where is the market today? As of early August, the national market saw rising prices but slowing sales. Are these natural fluctuations or a sign of changing conditions?
summer selling and home buying (season),” RE/MAX CEO Adam Contos told Housing News Report . “But, according to our June RE/MAX National Housing Report, while prices are at record highs and inventory is still at a record low, sales came in 5.5 percent lower than June 2017. ‘We have been expecting to see these numbers, even with low inventory and the Federal Reserve recently raising interest rates, homes are going from ‘for sale’ to sold 28 percent faster than three years ago. “The good news,” said Contos, “is that the rate of sales helps accommodate a shrinking inventory and buyers can still find opportunities. We saw some impressive prices moving up in markets throughout the U.S.” What about the next recession? “I feel that there will be a recession by late 2019-early 2020,” said Bruce Norris, president of The Norris Group and creator of the 2017 course, 2% Interest
Rates, $40 Trillion in Debt and Other Surprise Endings .
“During a recession, interest rates are lowered,” Norris said. “The fed fund rate, in past recessions, has been lowered by 4 to 5 percent. What makes this impending recession most interesting is the fed fund rate will stand at 3 percent or less when the easing begins. If the Fed lowers rates as aggressively as they normally do, we could end up in negative interest rate territory and have a 30-year loan that starts with 2 percent!” “The median family,” said Seeking Alpha in July, “cannot afford the median home in several expensive markets, like the San Francisco Bay Area, Seattle, and Los Angeles. Also, DTI ratios on new mortgages are high and rising, raising the risk that many borrowers will not be able to pay back their loans if the economy slows. New buyers will be unable to buy homes at current prices when interest rates rise, which will
“We will see a natural slowdown as we’re nearing the end of the busy
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AUG 2018 | ATTOM DATA SOLUTIONS
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