Is a Recession on the Way?

Is a Recession on the Way?

Is a Recession on the Way?

Industry Update
July 25, 2019

Source: DS News

According to experts, the next recession is on its way, and could begin next year. According to the Zillow Home Price Expectations Survey, conducted quarterly by Pulsenomics, a panel of more than 100 real estate economists and experts concluded that the next recession will likely begin in 2020.

Half of Zillow’s survey respondents said that the next recession will start in 2020, and around 19% stated that Q3 2019 will likely be the beginning of the recession. Another 35% of experts think the current expansion will end in 2021.

According to Zillow, trade policy will be a driving force behind the next recession, with only a few experts, just 12 respondents, pointing toward housing as a significant factor.

“Housing slowdowns have been a major component, if not catalyst, for economic recessions in the past, but that won’t be the case the next time around, primarily because housing will have worked out its kinks ahead of time,” said Skylar Olsen, Zillow Director of Economic Research. “Housing markets across the country are already heading into a potential correction a solid year before the overall economy is expected to experience the same. The current housing slowdown is in some ways a return to balance that will help increase the resiliency of the housing market when the next recession does arrive.”

Housing may not be the cause, but it will likely still feel the impact of the next recession. About 51% of survey respondents stated that home buying demand will be somewhat or significantly lower in 2020 compared with 2019, and Zillow notes that Homes will likely stay on the market longer and bidding wars will become less common. However, a recession may not result in a plunge in home values. Home prices are predicted to rise 4.1% in 2019, and 2.8% in 2020, down from the Q2 2018 prediction of 2.9% growth.

“More than any other factor with the potential to impact home-buying demand through 2020, mortgage rates are viewed by our expert panel to be most significant,” said Pulsenomics Founder Terry Loebs.

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