If you’re getting ready to buy a home soon, then you’ve probably heard whispers of an imminent recession—and the real estate market and recessions don’t have a great track record. Although it’s hard not to be plagued by memories of the 2008 recession and the housing market crash, you need to know: the conditions of 2008 will not happen again.
Here’s what makes this year’s market different, and why you shouldn’t be nervous about buying a home.
Even Though People are Wary…
It must be addressed that the events of 2008 are enough to give any buyer some PTSD. In fact, a recent survey from realtor.com found that 53% of buyers (both first-time and repeat) believe a recession will occur this year or next, and 57% believe it’ll be worse than 2008. On top of that, 55% said they would cancel their plans to move if a recession did occur.
While these people are certainly right in their prediction that a recession could soon hit, it won’t have nearly the same effect on the housing market that it did ten years ago.
…The Housing Market Won’t Resemble 2008
Jeff Tucker, a Zillow economist, sheds a little more light on this point. In a recent article, he outlines how unusual the 2008 housing market was—largely because of risky borrowers taking unpredictable, adjustable-rate mortgages when they may not have been financially prepared. This year, however, the market is mostly made up of buyers with great credit scores taking out predictable, 30-year fixed-rate mortgages.
George Ratiu, a senior economist for realtor.com, echoes Tucker’s sentiments, adding that a recession now would likely be much shorter than the one we saw in the past.
2001 vs. 2008
In the recent history of our country, there have been two major recessions: 2008 and 2001. While most people vividly remember the almost 20% drop in home prices during the 2008 recession, not many remember that homes prices actually went up almost 7% during 2001’s.
When it comes to the next recession, you can expect conditions to be more similar to 2001, not 2008.
Still on the Fence?
It’s true that no one can predict the future, and the state of the economy could greatly change over the next 12-24 months. While it’s great to be cautious, it’s also important to keep a realistic mindset—and listen to the experts.
If you’re hoping to buy a home soon, you should know that you don’t have to worry about 2008-like conditions. The current and future market are still great for buying!
Start Your Buying Journey
Ready to get started with your home search? Then Linda Craft & Team REALTORS® is here to help. Get to know more about our expertise and local knowledge, explore some of our resources, and give us a call when you’re ready to explore all of your Raleigh real estate options!