An increasing number of home buyers expect a U.S. recession in
the next three years, according to new survey data released today from
realtor.com®, the Home of Home Search℠. Although they remain optimistic that
it will be milder than the Great Recession, more than half of current home
shoppers expect to put their home search on hold until the economy recovers.
More than 36 percent of the 755 active buyers surveyed by Toluna
Research this month expect the next recession to begin sometime in 2020. When
the same question was presented to 1,015 home shoppers in March 2019, just under 30 percent indicated they expected
a recession in 2020. Additionally, 17 percent of current shoppers expect a
recession to hit sometime in 2019, 14 percent expect sometime in 2021, and 7
percent expect sometime in 2022. Eight percent expect sometime in 2024 or later
and 17 percent reported they didn't know. Active buyers are defined as
consumers who are currently shopping for a home.
As anxiety over a potential recession continues to rise in the
U.S., the home shoppers recently surveyed are prepared to hit the pause-button
on their home search until the clouds clear. Nearly 56 percent reported that if
a recession hit they would halt their home search until the economy improved.
"Economic activity is cyclical, so yes, undoubtedly we will
face another recession at some point in the future, but we do not expect it to
be anything like 2008," said George Ratiu,
senior economist at realtor.com®. "The next recession will likely be
driven by factors outside of housing, such as a prolonged trade war, cutbacks
in corporate spending or contagion from a European recession. Unlike 2008,
mortgage underwriting has been more disciplined and regulated, which should
provide a more secure foundation for housing during the economic ups and
downs."
Despite recession concerns, home shoppers also believe a future
downturn will be less severe than the housing crisis. Earlier this spring, 36
percent of home buyers were concerned that a future recession would be worse
than 2008. However, that number has dropped slightly to 35 percent since then.
News of trade wars and weakening economies globally dominate the headlines, but
overall home buyers are more optimistic than they were in March 2019. Nearly 44 percent of current shoppers feel an
upcoming recession will be less severe than 2008, up from 40 percent this past
spring. Twenty-two percent feel it would be the same.
Moreover, home shoppers' views toward homeownership have become
more optimistic. According to the survey, nearly 50 percent of home shoppers
revealed they think more favorably about homeownership after the 2008
recession. This is up from nearly 45 percent earlier this spring. The share of
home shoppers who said they felt very or slightly pessimistic toward
homeownership following the 2008 recession dropped slightly from nearly 22
percent in March to 21 percent this August.
While potential buyers are becoming more confident and hopeful
toward housing, those who are not currently shopping for a home have a much
more bleak view of homeownership. According to the survey, 32 percent of active
buyers indicated they are a lot more optimistic toward homeownership following
2008, whereas only 7 percent of non-buyers felt this way. In similar fashion,
non-buyers are nearly twice as likely, at 11 percent, to feel very pessimistic
or slightly more pessimistic toward homeownership following 2008, versus just 6
percent for active buyers.
"When warned about an incoming storm, Americans know to
prepare by stocking up on necessities and reinforcing their shelter. Similarly,
given the cyclical nature of economic activity, consumers can and should
prepare for the next downturn now. Taking steps to shore up their financial well-being,
strengthening their professional networks and having adequate savings would
provide cushioning during the slowdown," Ratiu noted.
Staff report
No comments:
Post a Comment