As talk of a recession starts to linger, buying or selling a home can be quite scary! However, a recession does not mean you should begin to worry by any means. Let’s take a look at the facts.
The graphic above proves home prices have appreciated in 4 of the last six recessions. In reality, home prices have only fallen twice, a minimal amount in the early ’90s and almost by 20% in the housing crash in 2008.
This last housing crash was triggered directly by lending practices. To make a long story short, people that could not afford a mortgage with bad credit were getting loans for more than the actual value of the homes, and at a variable rate. All in, a terrible equation. The requirements to get a mortgage have increased and considerably changed since then, making it a lot harder to approve for a loan, so we could avoid this from ever happening again.
In 2021 and 2022, we have seen home prices increase more than 20% compared to the year before, despite the heavy strain of the pandemic on many people’s wallets. Increased demand, also attributed to the pandemic, low interest rates, and lower home supply, led to a drastic uptick in home buyers’ costs.
2022 continues to show that real estate is an excellent hedge against inflation. This means that, while most assets and stocks will drop in value because of inflation, real estate will protect your money by growing in value at the same rate as inflation and, in many cases, even higher than inflation.
Over the last couple of months, even with interest rates on the rise, prices of homes continue to stay high and strong. We are finally moving from an insane sellers’ market to a more normal seller’s market. Most homes are still getting multiple offers, but the average time on the market has increased from 17 days to 25.
With a trusted agent, no buyer or seller should be intimidated by the possible event of a recession. Make that offer; this is your sign!
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