Many Americans wonder will there be a recession? In 2005 we were hit by a major recession with many foreclosure and short sale homes for sale across America with many new listings. This housing market era starting in 2019 which the pandemic economical impact shook the whole world. This also reminded us of the movie great recession and mortgage meltdown. The word inflation has been heavily booming even though the definition and requirements of recession has been met.
Truly the economy is in an in-balance for at least three to five years to see pre-pandemic interest rates again. With the unknown still, the trend in the beginning of the pandemic in March 2019, with the Russian and Ukraine war, this remains to be seen where and how the economy will settle.
The fact is if you are waiting for a recession in 2023 to purchase a home, generally more homes can come on the market at reduced prices and you can possibly snag a deal. For some odd reason this is not the same spot we are in as in 2005. Many wonder in 2023 is this a rolling recession, rich recession or no recession. Experts in 2023 truly believe we will avoid a recession because of an upswing in employment. The fed's are trying very hard to tame inflation, however the numbers in July 2023 are not where they like them to be.
This is truly a different housing ballon and homes for sale than the 2005 market crash. No where near compared short sales and foreclosures, however this season since 2019, we have a housing shortage due to low interest rates for two years has contributed to this major problem. Many homeowners has used equity to cover bills, avoid foreclosure and home improvements unlike the great recession in 2005 and relaxed lending standards. The lending standards has been under control through this whole process and the housing market nationally has entered a cooling stage since the June 2022 interest rate spike started.
The Chairman of the Federal Reserve Jerome Powell is determined to bring inflation under control and plans to have another spike in November and December 2022 to bring inflation down.
The experts predict the rebound housing market to be mild and short. The question is what is the definition of mild and short, however optimistic about the global economy over a three year horizon. Now as of March 12, 2023, two of the largest banks have members money at risk with Silicone and Signature Banks collapsing FDIC had to step in. This puts a stall in the decision to increase the mortgage interest rates in upcoming meeting mid March 2023. Housing is traditionally one of the first sectors that slow as the economy shifts but mainly one of the first to rebound.
Over the past five recessions, mortgage rates have fallen an average of 1.8 percent points. Many cases interest rates continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.
Also a few reasons why the experts say that the market is headed for a correction not a crash. The housing inventory remains low, the housing market needs to have a massive flood of homes added to cause a significant price reduction. Home values remain high in 2022 since two years ago and looking like room for negotiation due to several interest rate spikes in 2022 that may lead to a buyers market. Lastly lending practices are in place to reduce unhealthy loans due to the Dodd-Frank Qualified Mortgage.
This current timeframe we are in, give builders a chance to rethink strategy on how to cost effectively keep building homes without taking a loss. Dr Phillips being located in Central Florida remains strong due with mild home prices decreasing and minutes from the Disney Theme parks.
As a trusted advisor and professional realtor in the Central Florida and Dr Phillips area, feel free to contact Kevin Strawter for an appointment today at 850 496-6412 to stay tuned in, stay connected and educated in this volatile housing market for your purchase or sale of home. Click link to know more about Kevin Strawter /ABOUT-KEVIN-STRAWTER-P-A---MRP--GRI--ABR-6-14330.html?