2020 Recession Predicted

If it feels like housing and mortgage professionals have perpetually braced for a downturn over the last five years, it’s because they have. The cyclicality of the market is due to turn down, but prolonged economic expansion could protect homeowners when it does. While housing’s far from bulletproof, the sector has a stronger foundation in place, due to measures put in place when the last bubble burst.

About half of over 100 real estate experts believe the recession will come next year, with 19% overall predicting it for the third quarter of 2020, according to the second-quarter Home Price Expectations Survey from Zillow and Pulsenomics.


“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,” Skylar Olsen, Zillow director of economic research, said in a press release.

“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.”

Demand lightened recently and 51% of those surveyed said the push for home buying will be lower in 2020 versus 17% who said it’ll increase. If the market goes the way the majority believes, it’ll cause prices to fade and homes to stick on the market longer, shifting the advantage toward buyers.

“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 Terry Loebs, founder of Pulsenomics.

“Although 30-year mortgages are near 18-month lowsand available now at rates below 4%, the near-term outlook for home prices has actually weakened a bit from the previous survey in February. Together, these data suggest that most experts believe the recent rate move is a temporary dip, and that home buying demand through next year will be dampened by other, more persistent factors that affect affordability, such as constrained inventory and the growth of house prices relative to wages,” said Loebs.

Posted on nationalmortgagenews.com on 7/25/19.