What Past Recessions Tell Us About the Housing Market
It doesn’t matter if you’re someone who closely follows the economy or not, chances are you’ve heard whispers of an upcoming recession. Economic conditions are determined by a broad range of factors, so rather than explaining them each in depth, let’s lean on the experts and what history tells us to see what could lie ahead. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Two-in-three economists are forecasting a recession in 2023 . . .”
As talk about a potential recession grows, you may be wondering what a recession could mean for the housing market. Here’s a look at the historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession could mean for the housing market today.
A Recession Doesn’t Mean Falling Home Prices
To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.
Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. According to experts, home prices will vary by market and may go up or down depending on the local area. But the average of their 2023 forecasts shows prices will net neutral nationwide, not fall drastically like they did in 2008.
A Recession Means Falling Mortgage Rates
Research also helps paint the picture of how a recession could impact the cost of financing a home. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.
Fortune explains mortgage rates typically fall during an economic slowdown:
“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”
In 2023, market experts say mortgage rates will likely stabilize below the peak we saw last year. That’s because mortgage rates tend to respond to inflation. And early signs show inflation is starting to cool. If inflation continues to ease, rates may fall a bit more, but the days of 3% are likely behind us.
The big takeaway is you don’t need to fear the word recession when it comes to housing. In fact, experts say a recession would be mild and housing would play a key role in a quick economic rebound. As the 2022 CEO Outlook from KPMG, says:
“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .
More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”
Bottom Line
While history doesn’t always repeat itself, we can learn from the past. According to historical data, in most recessions, home values have appreciated and mortgage rates have declined.
If you’re thinking about buying or selling a home this year, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.
What Are Your Goals in the Housing Market This Year?
If buying or selling a home is part of your dreams for 2023, it’s essential for you to understand today’s housing market, define your goals, and work with industry experts to bring your homeownership vision for the new year into focus.
In the last year, high inflation had a big impact on the economy, the housing market, and likely on your wallet too. That’s why it’s critical to have a clear understanding of not just the market today, but also what you want out of it when you buy or sell a home. Danielle Hale, Chief Economist at realtor.com, explains:
“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, so that you can stay in your home long enough that buying is a sound financial decision.”
Here are a few questions you can start thinking through as you fine tune your goals for 2023.
1. What’s Motivating You?
You’re dreaming about making a move for a reason – what is it? No matter what’s happening in the market, there are still many compelling reasons to buy a home today. Your needs may have changed in a way your current house can’t address, or you could be ready to step into homeownership for the first time and have a space that’s truly your own. Use what’s motivating you as a guidepost in partnership with an expert advisor to help make sure your move will give you a lasting sense of accomplishment.
2. What Does Your Next Home Look Like?
You know you want to move, but how would you describe your dream home? The available supply of homes for sale has grown, and that could mean more options to choose from when you buy. Just be sure to keep your budget in mind and work with a trusted real estate professional to balance your wants and needs. The better you understand what’s essential and where you can be flexible, the easier it can be to find the home that’s right for you.
3. How Ready Are You To Buy?
Getting clear on your budget and savings is essential before you get too far into the process. Working with a local agent and a lender early is the best way to make sure you’re in a good position to buy. This could include planning how much to save for a down payment, getting pre-approved for a home loan, and assessing your current home equity if your move involves selling your existing house.
A Professional Will Guide You Through Every Step of the Process
Buying or selling a home is a big process that takes expertise to navigate. If that feels a bit overwhelming, you aren’t alone. According to a recent Harris Poll survey, one in five respondents see a lack of information or knowledge about the homebuying process as a barrier from owning a home. Don’t let uncertainty hold you back from your goals this year. At Boxwood, you have trusted experts to bridge that gap and give you the best advice and information about today’s market.
Bottom Line
Connect with a Boxwood Agent today to plan how your dreams for 2023 can become a reality.
4 Things Buyers Need To Know About the Inventory of Homes Available for Sale
If you’re thinking about buying a home, you’re likely trying to juggle your needs, current mortgage rates, home prices, your schedule, and more to try to decide if you want to jump into the market.
If this sounds like you, here’s one key factor that could help you with your decision: there are more homes for sale today than there were at this time last year.
1.According to Calculated Risk, for the week ending in November 18th, there were 47.7% more homes available for sale than there were at the same time in 2021. And having more options for your home search may be exactly what you need to feel confident about making a move.
Here’s a look at where the increased housing supply is coming from so you can get a better sense of what’s happening in the market today and what it means for you.
What Caused the Growth in Housing Inventory This Year?
2. The increase we’ve seen in housing supply this year isn’t from the source you think it is. Rather than an influx of recent homeowners listing their houses for sale (known as new listings), the primary reason the supply has grown is because homes are staying on the market a bit longer (known as active listings).
3. Higher mortgage rates and home prices have helped moderate the peak frenzy of buyer demand, which has slowed down the pace of sales. And, as the pace of sales has eased, inventory has grown as a result. The graph below uses data from realtor.com to show that it’s active listings, not new listings, that have driven the growth we’ve seen over the past few months:
And while overall inventory gains may slow down this winter due to typical housing market seasonality, you still have a chance to capitalize on the current supply.
What This Means for Your Home Search
Regardless of the source, the increase in available housing supply is good for buyers. More homes available for sale means you have more options to choose from as you search for your next home, and you may even have more time to consider them.
4. If you tried to buy a home last year and lost out in a bidding war or just couldn’t find something you liked, this may be the news you’ve been waiting for. If you start your search today, those additional options should make it less difficult to find a home you love, especially as some other buyers pause their search this holiday season.
Just remember, housing supply is still low overall, so it won’t suddenly be easy – it’ll just be less challenging than it was at this time last year. As a recent article from realtor.com says:
“Despite this improvement in the number of homes actively for sale, active listings still lag their pre-pandemic levels.”
The increase in housing supply helps put you in a great position to kick off the new year in your dream home. And who better to help you find it than a trusted, local real estate professional from Boxwood Properties?
Bottom Line
If you’re ready to jump into the housing market and see what’s available in our local area, let’s connect.
Ultimate Nashville Holiday Shop-Local Guide!
Over 30 retailers, restaraunts and shopping districts listed. Mostly positive opinions about what I love in these Nashville stores. Links to their websites and address to their stores to show your support in our local community! Nashville is one of the most creative cities in the US (actual statistics from Homes.com). Because we are surrounded by such brilliant creatives and entrepreneurs, it’s no surprise that our list of local places to shop this weekend is so extensive.
Brick and Mortar Retailers
Parnassus Books - Author Ann Patchett’s cozy local bookstore. Parnassus is located at 3900 Hillsboro, known as Greenbriar Shopping Center, where you’ll find other local favorites and the best donuts in Nashville I will fight you at Fox’s Donut Den.
Bella Vita - Fresh out of Memphis and New to Nashville, Bella Vita is delivering top notch home goods, cozy jammies and sweaters, and an amazing selection for wedding registry items. I’ve had the good fortune to meet the owners recently, and they are a fantastic addition to Nashville. You’ll find Bella Vita across from Bandywood Plaza at 2205 Bandywood Drive in Green Hills.
Hey Mavens - Lingerie, Gifts, and some apparel. FOR ALL. Their inclusive sizing never ceases to amaze. Hey Mavens could also qualify for local online retailer, I’ve honestly ever bought straight out of their instagram sales!
Apple and Oak in East Nashville has an endless array of gifts, home goods, cards, vintage and new rugs. Their inventory is absolutely delightful, and freshly stocked. You can find Hey Mavens & Apple and Oak in the Porter Rd shops at 727 and 717 Porter Rd, respectively.
Cumberland Transit is a Nashville Staple. “Nashvilles’ Oldest Outdoor and Bike Shop” carrying favorites for activities like Camping, Climbing, Fishing, Biking and more. Cumberland Transit still sits on West End near Vanderbilt University at 2807 West End Ave
Starland Vintage & Unusual Formerly Pre- to Post-Modern on 8th Ave, this shop is a Melrose Staple. Especially fun to shop during the holidays for vintage Santa blow-molds and other holiday themed delights. You’ll find Starland in 2110 8th Ave South.
Vinnie Louise is a Nashville based Boutique. The female owned business has a fantastic selection of affordable boutique clothing choices for women. They have two locations in Nashville on either side of the river! One location in 12th South and one on Gallatin in East.
Music City Golf for the the golfer in your life. In my life I’m the only non-golfer, but my family loves this store. Conveniently located in Belle Meade Plaza 5133 Harding Pike
Thistle Farms Total wiff if you’ve been in Nashville a while and don’t know about Thistle Farms! First of all, the cafe, is out of this world. Always a filling meal and good coffee. Their retail lines are developed and produced through their social enterprise program providing housing and community for women coming out of prostitution and sex exploitation. Retail includes oils, bath and body, apparel and more. You absolutely should shop in person, and grab a coffee this Saturday.
If you think I missed your favorite stops, check the Shopping Districts section below to make sure I covered all the bases!
Online Retailers & Makers
N.B. Goods Hats, Pins, Pennants and more - oh my! You can also request custom orders. Nashville based with Nashville flair on many items. Brilliant for stocking stuffers.
Brownlee Luxury Terry clothing. Small batches and sustainably sourced, these terry garments feel great, and definitely can be worn outside the house. Totally fine if you want to be a lush around the house in them this holiday season, though.
Y & Light Handmade jewelry out of Nashville. Their collections are fresh, innovative, and stylish in a most delightful way! Currently looking to add the “Menty B’s” to shopping cart for holiday themed wearing.
Nisolo A fashion retailer based in Nashville that is making huge strides to make consumers aware of the environmental impact of fashion. We can have fashion and not kill the planet at the same time, who knew. See their Sustainability Statement then uplift your wardrobe.
Daybreak Arts while you can shop in person on Studio days (highly recommend), you can browse online and support a local non-profit from the comfort of your office chair on Cyber Monday. We have partnered with Daybreak Arts a few times over the years, and had the opportunity to participate and get to know the artists. For the Art-Lover in your life, there is no gallery that can compete with the level of Social Impact and Joy that Daybreak provides for Artists and Patrons.
Shopping Districts
L&L Market - Located at 3820 Charlotte Ave, you’ll find more local shops and eateries here. Favorites include Happily Grey, Daphne, and This is the Finale featuring private shopping events - Shop with a Drag Queen. Absolutely, yes, sign me up.
Fatherland District A great retail hub in East Nashville (1006 Fatherland St) includes retailers and snacks! Don’t miss The Gift Horse, Guerilla Bizkits (vegan!), and Tenn Gallon Hat.
12th South - Just find a place to park and you’ll be set for the day. Some hyper local stops include coffee at Frothy, Imogene + Willie, Savant Vintage and more. You’ll also find brand name faves like Madewell, Marine Layer, and the Krewe permanent-pop-up trailer.
Hillsboro Village - another walkable district filled with local and brand names. Your coffee and snack stop here is absolutely Fido, For Shopping: The Impeccable Pig, Rebecca James Clothing, and UAL, fashion liquidators.
Downtown Franklin is my Black Friday Tradition. There’s a Frothy Monkey here too! Olivia Olive Oil with an extensive selection, Rock Paper Scissors, Hester & Cook, are my regular stops for stocking stuffers.
What did we miss? Tell us in the comments!