Are we going into a recession?
So, we have the technical definition of recession as two consecutive quarters with negative GDP. We’re certainly looking at first quarter, being projected as being negative. Then, we’ll confirm that when that comes out second quarter of being significantly negative.
I think it is safe to say we were in a recession now. That there, technically we’ll probably wait until the end of the second quarter to call that. But a recession is nothing more than an economic slowdown. And what do we know that’s happening from businesses that we interact with from places that we live.
The Economy as we say…
We know the economy has slowed down based on this pause button that’s been hit. But, but what we know we can confidently say is recession means economic slowdown, not necessarily housing crisis. And I pulled this quote from Mark Fleming first American.
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak, But there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”Mark Fleming, Chief Economist – First American
So we know that when we mentioned recession consumers here, this is 2008 all over again. What we know is that while our business was literally at the middle of the economic downturn in 2008, this time with low inventory across the country and with the economic impact that happens at the purchase, construction and sale of a home.
We are poised as an industry to help pull our economy out. And it’s important to remember. The next quote I pulled was from Doug Brian, who’s CEO of Mynd Property Management, kind of a consulting firm.
“With the exception of two recessions, the Great Recession from 2007-2009, and the Gulf War recession from 1990-1991, no other recession have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018”Doug Brien, CEO – Mynd Property Management
Now that comes from data collected all the way back to 1975. So when we go all the way back to 1975 to today, look at recessions across this country and their impact on home prices. There are two that stand out as being showing depreciation, one is 2008, which we all remember, the other is in 1991.
Living within the recession
If we look back, there were actually five recessions during that time, three of those five, we saw appreciation, during that actual recession. So that came out from Freddie Mac and the home price index. This is a graphical representation from CoreLogic and it, and it lines up with what we just read.
We all remember 2008 close to 20% depreciation. But then when we look at the four recessions prior to that only one, 1991 saw deep appreciation. So interesting graphic to get out in the market. You may have seen this before, but I would always say this don’t fall to the curse of knowledge, meaning you may know it, but the clients that you serve may not know it and most likely don’t know it. Maybe referral partners that you do business with may not know it. And so keeping that in mind is as big.