An economic slowdown, or recession, does not mean that the value of a home will go down. A recession does not equal a housing crisis.
Everywhere I look “experts” are warning we could be moving toward a recession soon and if that is true, there is one simple fact, it does not mean homes will lose value.
The definition of a recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion. (Source: National Bureau of Economic Research)
Take a look at the historical data chart below. 2008 was a VERY unique situation, but that is what we all remember right?
We had 6 recessions in the past 40 years. If we look at those recessions going all the way back to the 80’s (yes 40 years ago is the 80’s…I know, I get it…)
If we look at those 6 recessions, home prices went up during 4 of them and one of them homes only lost 1.9% in value.
We are a sum of our experiences…we all remember the bubble in 2007/2008. We remember all of the foreclosures. We remember the slowdown in Real Estate transactions. Keep in mind, 2008 was a very unique situation.
The pending recession, or decline in activity, does not guarantee that home values will decrease. Home values may dip, I don’t have a degree in this stuff, what I am pointing out is that it is not guaranteed.
Let’s control what we can control and make the best of the rest. Keep doing what you are doing, don’t stop working hard, don’t stop trying to close deals, don’t read all of the headlines in the news and ASSUME that we are headed toward the end of the world.
Remember, those companies get paid for advertising, they get paid for eyeballs, why do yu think they don’t report that much good news…it’s out there, they choose not to report most of it because bad news brings eyeballs.
Remind your clients & agents of what I said above, send them this information, make it your own, you have my permission to copy what I wrote above and use it as you wish.
About the author: John Henning
I have been a Franchise Growth Professional for over 18 years. More than 700 entrepreneurs have trusted me to help them start their own business through Franchising. I have worked with Real Estate Franchises, Title JV’s, Insurance Franchises & Mortgage Franchises.
Currently I work for Motto Mortgage Franchise HQ, which is a mortgage brokerage business in a box. Real Estate Brokers, Team Leaders & Top Agents should take a look at adding a Motto Mortgage Franchise to capture more of the revenue that is flowing through your real estate business. Read more here: http://MottoMortgageFranchise.com
(The Real Estate Broker Magazine™ is not affiliated with Motto Mortgage but John Henning our Editor does work for Motto as a W2 employee selling franchises)