Remember when the new decade turned, and experts were singing the good fortune forecasted for the housing industry? Though the housing industry has not been hit the way industries such as travel have been by the coronavirus' effects, that hopeful feeling seems far away. Just three months earlier, half of homebuyers and sellers surveyed by Redfin expected home prices to rise during the next recession. Then the coronavirus’ spread began, and now nearly one-third of homebuyers and sellers say they believe that home prices will decline. Still, economists point to previous recessions as examples of where home prices rose, save for the Great Recession started by the housing crash. But when everything is changing around us, it is no surprise that the coronavirus' spread is impacting into American’s perceptions of the housing market.
Nearly one-third of homebuyers and sellers expect home prices to decline when the next recession hits, a complete flip from just three months earlier, when 56% of those surveyed expected home prices to increase during the next recession. That’s according to two surveys conducted by Redfin. In December, 25% of surveyed homebuyers and sellers expected home prices in their area to decline during the next recession; as of March that number has jumped to 44%.
“It’s easy to become fearful when it feels like a recession is imminent, but it’s important to remember what has actually happened in past recessions,” said Redfin chief economist Daryl Fairweather. “Home prices declined substantially during the Great Recession, which started with a housing crash, but throughout the 2001 recession home prices actually rose due to a nascent housing bubble and a shift in investment dollars from the stock market into real estate. It’s perfectly reasonable to expect that a 2020 recession won’t stop home prices from rising, since the supply of homes for sale is so constricted and mortgage rates are at all-time lows.”