The Truth Behind Recessions and Real Estate

– Are we on the brink
of another recession? If you read the headlines a lot of people are talking about a possible recession and a lot of people have concerns and questions around a recession, so today I just wanted to
take a couple of quick minutes to talk about some of
the facts that we know. (bright music) Hi, I’m Trae Dauby with The Dauby Team of Keller Williams Capital Realty. If you pay attention to the
news you’ve probably seen a lot of headlines around
a possible recession and we’ll probably a lot
of more crazy headlines over the next 15 months as the presidential election
is decided next fall. One party may be saying that
the economy’s doing great, while another party may say that the economy’s not in great shape. But I wanted to talk to
you today about the facts about what some economists
think are really gonna happen with the economy throughout
the next few years. So far this year there has
been four major surveys of economists with their predictions in what they think the future holds in regards to a recession in the economy. And if you look at the slide that we have pulled up right now, you can see that these four surveys were done by the Wall Street
Journal, Pulsenomics, Duke, National Association of Business
Economy Members as well. And as you look we’ve put the results up of each individual survey and
then they’ve also been merged into one file and you can
see on the second graph that actually 67% of
the economists believe the recession will begin
within the next 15 months. Now why do they believe this? We are actually in the
longest stretch of a recovery since the last recession in 2008 that America has ever seen. So at some point the
economy has to slow down. Now recession is where
gross domestic output declines over two quarters. Many of these economists
believe that this recession will be a very light recession and it could be over
before we even realize it. Now whenever you think about recession, I’m sure many of you think about 2008 where there was a housing crisis. Many of the economists do not believe that that’s gonna happen this time. In fact if you take a look at the graph that’s on the screen right now, you can see that these same economists that were surveyed on the same day that they believe the
recession will happen within the next 15 days, you can see that they actually believe that home values will continue to rise over the next five years. You can see that they predict appreciation to be around 2.5 to 3.5%,
which is definitely down from where they’ve been over
the last few years around 5%, however that homes are still appreciating and going up in value and
not dropping in value, which is very good news. Historically home appreciation
is around 3.5 to 4%. Now let’s take a look at one last graph. You can see here that actually during the last several recessions homes did continue to appreciate. As you can see in 2008, we all know 2008 was a very bad year for the housing market and that recession was actually caused in part due to the housing
market in lending at that time. Lending is not happening
like it was back then and you can see where
home values actually drop 19.7% during the 2008 recession. However if you look at the
previous four recessions, you can see that homes
actually appreciated by 6.1% during the 1980
recession, by 3.5% in 1981. They did slightly drop during
the 1991 recession of 1.9%, and then they also homes appreciated 6.6% during the 2001 recession. So despite what you read in the headlines, don’t panic about the housing market. If you’re thinking about buying a home, if you’re thinking about selling a home, the economists are not
predicting a housing meltdown like we had in 2008, so it is a very strong real estate market. If you have any questions
about this video, or anything real estate related, always feel free to reach
out to us at 812-777-4611. Again I’m Trae with The Dauby Team of Keller Williams Capital
Realty, have a great day. (bright music)

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