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Whispers on the street are starting to compare the plunging stock market to the days before the Great Recession, but economists say that the landscape is actually much different than the last time the market went haywire. This time if we do experience a recession, it will not originate from the housing market. Based on historical data, a report by First American Financial Services points out that homes continued to appreciate during recessions that weren’t started by shady lending practices that led to foreclosures. And in an ironic twist, the report says that the inventory shortage may actually give builders a cushion to continue to work to fill the gap even if the economy takes a downturn as demand will still be greater than the supply of homes. Still, there are signs that builders should keep their eyes on: dropping confidence, the refinancing market, and homes that could foreclose if people start losing their jobs.
Markets have declined sharply in recent weeks thanks to the global coronavirus outbreak, and now the threat of an oil price war has investors even more concerned. But even with the specter of a recession mounting, homeowners may not need to worry much about their home values falling in line with the stock market, a recent report argues.
Researchers at First American Financial Services FAF, 3.298%, a title insurance company, recently examined how the country’s housing market has fared historically during recessionary periods. Based on what’s happened in past recessions, First American’s report argues that the next recession is unlikely to prompt a major downturn in housing.
