Is this the right time to buy real estate? #3

by Debra Ahn

Continuing to look at some factors causing buyers to hesitate and ask if the prices will go down more from where they are today.

In this blog, let’s take a look at recession and what happens during a recession.

First, are we already in a recession? Possibly….

Let’s look at some common indicators of recession.

Contrary to several Fed member’s opinion where they believe we are not in a recession DUE to low unemployment rates ,the graph below tells us, recession almost always starts when unemployment rates are at their lowest respective levels. The grey bars are periods of recession.

Also an inverted yield curve below is a precursor of recession. Whenever, the value was negative, a recession followed.

We may or may not be in a current recession, but it seems pretty clear we will go through a recession.

So how does a recession impact your home purchasing decision?

Let’s look at past home value data during a recession.

During a recession(grey bars), home values actually do very well as evidenced by the Case-Schiller index. With the exception of the recession due to the Financial Crisis of 2007-2008(when there was excessive supply of new homes and jumbo financing options disappeared), home values actually increased during recessions in the past.

And in the Bay Area especially, the rate of home value increase after recessions have been rapid. Also, during a recession, mortgage rates tend to improve, so if you are a home owner, you have opportunities to refinance.

All the more reasons to buy NOW!

So contact me if you are interested in any property and want to learn more about the current market.