There’s been a lot of talk in the media about a coming recession, and this has plenty of people feeling somewhat panicked. After all, the last time we had a recession, it led to a housing crisis—or so people think.
In truth, the housing crisis caused the recession; not the other way around.
Still, recessions are a normal part of the business cycle, and since we’ve seen such a long period of economic expansion (one that has lasted since 2012), we’re likely in for another one.
This doesn’t mean, however, that there is reason for fear. The true definition of a recession is simply “a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
Looking back over the last five recessions, three of them saw properties continue to appreciate throughout. The nearly 20% drop in home values we saw in 2008 is a significant outlier in historical trends.
It’s also important to keep in mind that these statistics reflect the nation as a whole. In our Boston area market, prices merely flattened out a little during that period.
The bottom line is that the coming downturn is nothing to fear, especially if you approach it correctly. This means buyers should plan on staying in their next property for at least three or four years—something I always advise my clients to do, anyway. And since interest rates have dropped to about 3.75%, now is a particularly good time to make a move.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.