Next Recession in 2020? What Should You Know?

Economists and analysts know that the country has experienced economic growth for almost a decade. Thus, they also know that a recession may be approaching soon. A recent report published by Zillow Research brought to light a survey in which they interviewed economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession, and the majority of experts expected the next recession to begin in 2020. This survey confirms recent statements published by economists in the Wall Street Journal: 

“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”

What should you know and how this affect the real estate market? First of all, a recession does not equal a housing crisis. A recession is defined as a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. A recession essentially means the economy has slowed down significantly. However, it does not mean we are experiencing another housing crisis. Although the housing crash of 2008 caused the last recession, during the previous five recessions home actually values appreciated.

According to economic experts, the top three probable triggers for the next economic recession are monetary policy, a stock market correction, and trade policy. A housing market correction was ranked ninth in probability. Those same experts also projected that home values would continue to appreciate in 2019, 2020, 2021 and 2022.  

Others agree that housing will not be impacted like it was a decade ago. If a recession occurs, it is unlikely to be caused by housing-related activity, and consequently the housing sector should be one of the leading sources to come out of the recession.

Essentially, a recession is probably less than two years away. However, a housing crisis is not.