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Recession? Yes, California Housing Market Crash? No

Jul 28, 2020  , , , , , , ,

Recession Yes California Housing Market Crash No

The National Board of Economic Research (NBER) has announced that the U.S. economy is officially in a recession.  To which most of us would respond, “No kidding!”  The Bureau defines a recession like this:

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators.”

We are all very aware of the consequences to the economy since this shutdown.  There is, however, a vast difference between this recession and the last one a decade ago with regards to the housing industry!

Mark Fleming, Chief Economist at First American, explained the situation thusly:

“Many still bear the scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak.  But there are distinct differences that indicate the housing market may follow a much different path.  While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Taking into consideration our home state of California, what factors are present that make the difference between this recession and the last one?  We can look to four major reasons:

  1. Families generally have larger sums of equity in their homes.
  2. We have a shortage of housing inventory.
  3. No more irresponsible lending practices.
  4. Home price appreciation is not out of control.

It is good to remember that in three of the four previous recessions before 2008, home values appreciated.  It is the consensus of the experts that this time the housing industry is far better positioned to ride out the storm – and even come out stronger in the end.

And for both Northern California and Southern California real estate markets, values have slightly dipped but are already on their way back up to pre-pandemic.

So, get out there and connect with your local licensed Lender to get pre-qualified for a purchase and connect up with your local Realtor to find you that perfect home.

Best, Ken – Another Guy in the White Hat




The content of this blog contains general advice only and does not consider individual financial circumstances, desired loan amounts or existing real estate or lending transactions. This information is intended for licensed Real Estate Agents and licensed Lenders/Mortgage Brokers and is posted on our company website and specific blog sites with the express purpose of reaching such licensed individuals.

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