Chances remain low that the housing market will sink to the depths seen in 2008-2010
In its most recent market forecast, Veros Real Estate Solutions projects average annual home price appreciation of 1.9% for the 100 largest housing markets in the U.S. in 2020. Not so bad considering the economy is currently encased in concrete.
Although that 1.9% is half the rate of appreciation projected by the company in January, Veros’ Vice President of Statistical and Economic Modeling, Eric Fox, says most housing markets are set to come out of the upcoming recession little worse for wear.
“The fundamentals are still there with the housing market,” he says. “There are no signs that demand or supply is going to come crashing down.”
Fox describes what is currently happening in markets across the country as a pause rather than an unravelling. Rather than cancelling their home sales, relocations or retirements, he says clients are simply delaying their next moves for the next few months.
That level of patience was in short supply during the 2008 financial crisis. Passing through such a crucible, Fox says, not only woke new homeowners to the fact that housing prices can, in fact, fall, it also prepared them for the next crisis – the one we’re all sharing a slice of today.
That preparedness means no panic selling and no rising inventory levels. Prices should, therefore, stay where they are. Fox expects a “small hiccup” in prices for the next two quarters, followed by “a big, fast rebound at the end of the year.”
Fox urges interested parties sorting through the ashes of the 2008 nuking of the economy in search of guidance to keep in mind the fundamental difference between the last recession and the one we’re currently staring down the barrel of.
“The last one was really different, in terms of it was housing that caused the recession,” he says. “When we’ve seen recessions not being caused by housing, housing tends to still do okay.” During the most recent recession, in 2001, a time in which unemployment doubled, prices did indeed keep rising.
“Recession doesn’t always equal house price depreciation.”
Some markets, like NY, are on ice, but activity is still occurring “We’re still seeing houses go under contract that have gone under contract that have been on the market for five days on the MLS. There are still lots of markets where people are buying, and we’re not seeing aggressive price pressure.”
Seller sentiment today compared to the last meltdown: homebuyers ready; last downturn taught owners that the cycle exists;
Fastest growing markets; 4/10 in WA, does supply and demand rule? “I think it does.” Lots of jobs; lot of pending sales; if jobs and plans to retire are set, they’re just being pushed back;
Expects pent up demand being unleashed in markets with strong fundamentals; forecast calls for a short period, a quarter or two of price declines, and then
Market lethargy, not enough pressure to change things; low demand, low supply; spike in demand, possibly at the end of the summer
