Are we heading into a Recession and is now a good time to buy and sell?
From the time of this recording, the Unemployment rate dropped to 3.6% and wages are up to 3.2%. Due to these factors, the likelihood of a recession being right around the corner as predicted earlier in the year is starting to lessen according to several economists and analysts across the Country.
I know this can be so scary, I’ve been in a recession during my real estate career and I’ve seen how devastating it can be and how it can create panic and chaos as far as what to do when thinking of buying and selling.
Let’s look at what Anthony Chan, Chief Economist of JP Morgan Chase states “I feel really comfortable that the economy is slowing down this year, but not going into a recession….It doesn’t look, to me, like the odds of a recession in 2020 are there.”
Dean Baker, Senior Economist states “However, with wages growing at a respectable pace, and job growth remains healthy, we should see enough consumption demand to keep the economy moving forward. That means slower growth, but no recession.”
So if you’re fearful of buying due to a recession, you may want to think again. Rents continue to go up significantly. If you look at the Rent Index percent in change from 2005 to 2018 according to CoreLogic we see a 36% increase in rents and a negative four percent increase in mortgages. That means rents are going up and mortgages are going down.
You may be wondering why the difference? Well, mortgage rates back in 2005 were significantly higher as you see on this graph. This is a perfect example that over time it makes so much more sense to buy than to wait and rent.
So seller’s, what should you do? Remember, it’s all relative if you want to sell but are waiting for prices to go down unless you are downsizing and purchasing a lower-priced home, as your house increases so do the home that you are purchasing.
And according to Freddie Mac, interest rates are anticipated to continue to go up which will also play a role on your mortgage payments increasing for buyers and for sellers who are looking to subsequently purchase, so it’s time to act now.
As always feel free to reach out to me with anything community or real estate related. I’m Shawn Shackelton with The Shackelton Group helping client’s one relationship at a time.