Recession Fears Shouldn’t Stop Home Buyers or Sellers

If only we had a crystal ball to predict the future. While that is one ball we don’t juggle here, we can certainly put some recession fears to rest for anyone considering selling or buying a home in the coming months.

Here’s our view on the current housing turbulence and why we believe there is more reason for optimism than you might think.

The past is NOT the present

It’s easy to make the mistake of comparing today’s potential recession with the Great Recession of 2008. Back then, global unemployment reached 10%, and home values dropped more than 25% nationwide. Millions of Americans lost their jobs, which led to the U.S. housing bubble burst. But a few underlying factors make this time different:

1.    Lenders' underwriting processes have become far stricter over the last decade.

2.    Consumers' personal financial situations are much more secure today. They have better credit and save more.

3.    The job market is as strong as it has ever been. There are more job openings than job seekers.

4.    Homeowners have far more equity in their homes than they did 15 years ago. Therefore, we are not likely to see as many distressed sales.

5.    Home inventory is historically low, which helps support prices.

Home values are relatively recession-proof

If you want to sell your home now, will you have to worry about dropping home prices? Not if you look at our nation’s recent history. Over the last 50 years, every other recession has had a negligible impact on nationwide home prices. Surprisingly, some recessions actually resulted in increased home values — as much as 6%![1]

And if you’re a buyer, the worst recession in 2008 resulted in an average price drop of approximately 25%. And even if you purchased a home during that time, the current value of your home, on average, has still grown by more than 60%. That is an incredible return and demonstrates that, if you live in the same home for at least ten years, the housing market has always provided positive returns — usually tax-free.

You don’t need to sit on the sidelines

If this is the ideal time for you to make a move, there is no reason to miss out on your dream home or condo. At Falk Ruvin Gallagher, we work creatively to find our buyers' mortgage rates of less than 6%. With the help of seller concessions — closing costs the seller agrees to pay on behalf of the buyer — we are able to achieve mortgage rates below 5% for the first year or two of ownership. This strategy allows many of our clients to find incredible homes in a less competitive environment with reasonable interest rates.

To provide even more assurance, we created Home Buyer Protection. If you unexpectedly have to sell your home within two years of moving in, FRG will work with you to effectively market your home. If the sale price is below your original purchase price, we will cover most or all the difference.

Please feel free to call us at (414) 622-7159 or email info@thefrgteam.com.