Why We’re Not Heading for a Housing Recession

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Why We’re Not Heading for a Housing Recession
Increasing home prices across the nation are leading to certain stories cropping up in real estate news outlets: recession fears, slowdown looming. Sarasota real estate reports high median home prices and shorter days on market, but will these last? The National Association of Realtors’® (NAR) Chief Economist Lawrence Yun recently weight in on the future of housing and we’re inclined to agree with his take.

“Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases," Yun says.

Essentially, as Yun elaborated, while busy markets like Sarasota could see sales slowdowns, those are the result of low housing supply and not consumer demand. The lack of inventory is increasing home prices because buyer demand remains high. A true recession happens when buyer demand is weak and too much housing inventory lingers on the market.

His assertion is backed by Freddie Mac’s 2018 August housing forecast. The report shows the constrained housing supply and affordability challenges will temper home sales growth, but not buyer demand. According to Freddie Mac, “Total home sales (new and existing) for the year are now forecasted to increase 0.2 percent, and home price growth - which has softened somewhat in recent months - is still anticipated to rise 6.0 percent.”

Sarasota single family home price growth grew 8 percent year-over-year in July 2018 while the time to contract declined three days. New listings declined 7.5 percent. This aligns with the overarching trend reported by leading real estate institutions like the NAR. Demand likely will continue outstripping available supply, even as new housing starts increase.

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Todd & Tamara Currey
  • Tamara Currey

    Tamara Currey

    Realtor

    GRI, CIPS
    Licensed in Florida

    941.587.1776

    tamara.currey@premiersir.com

  • Todd Currey

    Todd
    Currey

    Realtor

    CPA, GRI, CRS, ABR
    Licensed in Florida

    941.918.8889

    todd.currey@premiersir.com