Housing MarketReal Estate August 17, 2022

What Would a Recession Mean for the Housing Market? MacFarlane Homes Blog

What Would a Recession Mean for the Housing Market?

What Would a Recession Mean for the Housing Market? | MyKCM

According to a recent survey from the Wall Street Journal, the percentage of economists who believe we’ll see a recession in the next 12 months is growing. When surveyed in July 2021, only 12% of economists consulted thought there’d be a recession by now. But this July, when polled, 49% believe we will see a recession in the coming 12 months.

And as more recession talk fills the air, one concern many people have is: should I delay my homeownership plans if there’s a recession?

Here’s a look at historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession would mean for the housing market today.

A Recession Doesn’t Mean Falling Home Prices

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at the recessions going all the way back to 1980, home prices appreciated in four of the last six recessions. So, historically, when the economy slows down, it doesn’t mean home values will fall.

What Would a Recession Mean for the Housing Market? | MyKCM

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would repeat what happened then. But this housing market isn’t about to crash. The fundamentals are very different today than they were in 2008. So, don’t assume we’re heading down the same path.

A Recession Means Falling Mortgage Rates

Research also helps paint the picture of how a recession could impact the cost of financing a home. As the chart below shows, historically, each time the economy slowed down, mortgage rates decreased.

What Would a Recession Mean for the Housing Market? | MyKCM

Fortune explains that mortgage rates typically fall during an economic slowdown:

Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from and find comfort in the historical data.

Bottom Line

There’s no doubt everyone remembers what happened in the housing market in 2008. But you don’t need to fear the word recession if you’re planning to buy or sell a home. According to historical data, in most recessions, home price gains have stayed strong, and mortgage rates have declined.

If you’re thinking about buying or selling a home, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.

Lynne Watanabe MacFarlane, Realtor MCDM, SRES, SRS | DRE # 02066698

Intero | Berkshire Hathaway affiliate

LMACFARLANE@INTERO.COM

(408) 800-1141 Silicon Valley / Bay Area

(831) 346-2743 Santa Cruz / Monterey Bay

Dreams do come true! I am so pleased that we were able to hustle and win this lovely Seascape property for my clients after their last realtor failed. Being a buyer in the hot seller’s market is tough and you need a strong advocate to help serve you. Give me a call, I’m happy to assist you and your friends to make your real estate dreams come true!

EconomyHomeownersHousing MarketReal EstateSellersTaxWealth August 9, 2022

3 Graphs To Show This Isn’t a Housing Bubble – Lynne MacFarlane Realtor Blog

 

With all the headlines and buzz in the media, some consumers believe the market is in a housing bubble. As the housing market shifts, you may be wondering what’ll happen next. It’s only natural for concerns to creep in that it could be a repeat of what took place in 2008. The good news is, there’s concrete data to show why this is nothing like the last time.

There’s a Shortage of Homes on the Market Today, Not a Surplus

The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to tumble. Today, supply is growing, but there’s still a shortage of inventory available.

The graph below uses data from the National Association of Realtors (NAR) to show how this time compares to the crash. Today, unsold inventory sits at just a 3.0-months’ supply at the current sales pace.

3 Graphs To Show This Isn’t a Housing Bubble | MyKCM

One of the reasons inventory is still low is because of sustained underbuilding. When you couple that with ongoing buyer demand as millennials age into their peak homebuying years, it continues to put upward pressure on home prices. That limited supply compared to buyer demand is why experts forecast home prices won’t fall this time.

Mortgage Standards Were Much More Relaxed During the Crash

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. The graph below showcases data on the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA). The higher the number, the easier it is to get a mortgage.

3 Graphs To Show This Isn’t a Housing Bubble | MyKCM

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.

Today, things are different, and purchasers face much higher standards from mortgage companies. Mark Fleming, Chief Economist at First Americansays:

Credit standards tightened in recent months due to increasing economic uncertainty and monetary policy tightening.” 

Stricter standards, like there are today, help prevent a risk of a rash of foreclosures like there was last time.

The Foreclosure Volume Is Nothing Like It Was During the Crash

The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been on the way down since the crash because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help tell the story:

3 Graphs To Show This Isn’t a Housing Bubble | MyKCM

In addition, homeowners today are equity rich, not tapped out. In the run-up to the housing bubble, some homeowners were using their homes as personal ATMs. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a wave of distressed property listings (foreclosures and short sales), which sold at considerable discounts that lowered the value of other homes in the area.

Today, prices have risen nicely over the last few years, and that’s given homeowners an equity boost. According to Black Knight:

In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months – a 34% increase that equates to more than $207,000 in equity available per borrower. . . .”

With the average home equity now standing at $207,000, homeowners are in a completely different position this time.

Bottom Line

If you’re worried we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your concerns. Concrete data and expert insights clearly show why this is nothing like the last time.

Call me if you have any questions

Lynne Watanabe MacFarlane, Realtor

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Intero, a Berkshire Hathaway affiliate

408-800-114- Silicon Valley / Bay Area

831-346-2743 Santa Cruz County / Monterey Bay

Housing MarketSellersSellers MarketVideo October 23, 2020

Housing Update Oct 2020 [video] – Reasons Why Sellers in the SF Bay Area Should Consider A Move Now

Oct 2020 market report for national and SF Bay Area. Hello Sellers! If you were waiting for that time that you wished. you had taken advantage of last time and WISHED you had got the most out of your money before it went down – well, maybe this is your time. Here’s Oct housing trend and we take a look at what the economy has done nationally and what’s happening now locally in the SF Bay Area. We learn how the economist forecasters change their home price appreciation predictions. We discuss why the average U.S. citizen (not home buyers) have improved their FICO scores and proof that the American entrepreneurial spirit is alive and well during times of economic distress. And lastly, we learn why being a seller in this market is a fantastic opportunity (with existing home sales up 34% YTY and listings down -32% in the Bay Area).

 

Will

Does the home I’m currently in meet my needs for the next decade?

Lynne Watanabe MacFarlane, MCDM, SRES | Realtor

Intero Real Estate Services 831-246-2743 text anytime

What’s My Home Worth? https://sfbay.areahomevalues.net/

Lynne MacFarlane Homes

I like to educate my clients and friends about what’s going on in the real estate market and depending on whether you’re a seller or buyer (or investor) I’ll give you the facts so you can make informed decisions. Give me a call, let’s have a cup of coffee to discuss your real estate goals, I want to help you achieve them. 831-346-2743 Lynne Please LIKE and Subscribe I’m happy to help and educate. If you know of someone who needs assistance, I’m also a PFAC affiliate (Professional Fiduciary Assoc. California- Silicon Valley) I have a great network of specialist who can assist with special needs, disabilities and seniors. I also have an advance certificate in SRES (Senior Real Estate Specialist) I partner with Intero | Berkshire Hathaway affiliate, the top brokerage network in the SF Bay Area, offering off-MLS listings, Pinnacle concierge services, lending and title to bring my clients a smooth and seamless transaction experience.

SANTA CLARA COUNTY August 26, 2020

Weekly Update Look at Five SF Bay Area Counties

It’s the Weekly Update look at real estate activity in the five SF Bay Area counties (San Mateo, Santa Clara, Santa Cruz, San Benito and Monterey). Take a look at the contrast between 2019 vs. 2020 (March 1st – Aug 22nd) and how far we have bounced back from SIP looking at May, June and July differences between the years. In July 2019 we had a total of 2,757 Closed Sales, but July 2020 we had 3,134 Sales, that’s a 13% Year over Year difference.
#realestate #bayarearealestate #sfbayarea #housingmarket #bayarearealtor #Intero #MLSlisting #Aculist

BuyersWhy buy May 30, 2020

Prosperity Home Mortgage – Interview with Rashel Yadegari [Video]

Today I interviewed Rashel Yadegari, Prosperity Home Mortgage as we discuss the common lending myths in the home buying process. If you have any questions with the lending process, please don’t hesitate to contact me or Rashel. Hope you enjoy my interview, as it is meant to be a open conversation and an ongoing discussion; I believe it’s best be informed so you can make smarter decisions.

Rashel Yadegari, Prosperity Home Morgage, Mortgage Consultant
NMLSR ID: 1246397
Cell: 408-912-0570
email: Rashel.Yadegari@phmloans.com

Lynne Watanabe MacFarlane, MCDM, SRES | Realtor
PFAC Silicon Valley affiliate
Intero | A Berkshire Hathaway Affiliate
phone 831.346.2743
DRE# 02066698
www.Intero.com | facebook | linkedin | blog | videos| luxury home collection | committed to our community

Thanks for your interest!

Lynne MacFarlane Homes

Open HouseReal Estate May 14, 2020

Virtual Open Houses – Lynne MacFarlane, Realtor

Lynne MacFarlane, Realtor does Virtual Open Houses following CDC guidelines

Sheltering in place doesn’t mean real estate transactions have stopped.

I’ll be hosting virtual open houses which allows prospective buyers to see properties from the comfort of their home, while remaining compliant with the SIP mandate.

Call me today if you’re interested in buying or selling a home.

Thank you and stay well!

 

Lynne MacFarlane, MCDM, SRES

PFAC affiliate, Realtor

DRE #02066698

(831) 346-2743 mobile/ Lmacfarlane@intero.com

www.lynnemacfarlane.com

 

Lynne MacFarlane Homes

ArticlesEconomyHomeownersMONTEREY COUNTYReal EstateSAN MATEO COUNTYSANTA CLARA COUNTYSanta Cruz County March 23, 2020

Will The Corona Virus Create A Housing Crisis …And Our New Norms

Lynne MacFarlane, Realtor - Together, we got this!

I provide a Home & Lifestyle Consultation to prepare what buyers want now! Today’s modern savvy realtor uses virtual real estate technologies. I provide what buyers and sellers truly want in experience and safety. Click on image to learn more!

Concerns about the impact COVID-19 will have on the global and local economy are real. They’re scary too as the health and wellness of our friends, families, and loved ones are high on everyone’s emotional radar.

While we don’t know the exact impact the virus will have on the housing market, we do know that housing isn’t the driver as it was in 2008.

Lynne MacFarlane Realtor explains

A Recession Does Not Equal A Housing Crisis:

  • The COVID-19 pandemic is causing an economic slowdown.
  • The good news is, home values actually increased in 3 of the last 5 U.S. recessions and decreased by less than 2% in the 4th.
  • All things considered, an economic slowdown does not equal a housing crisis, and this will not be a repeat of 2008.

As our country begins to collectively roll out shelter in place, I hope we can come together, take the time to share gratitude; let’s remember that this will pass. As a country we’ve experienced multiple divisive events such as Civil War, WWII, and more recent traumatic events as 9/11. The concerns about an impending recession are real, but housing isn’t the driver. During the Dot.com bubble starting in late 90’s, a period of massive growth of Internet & telcos, in 2002 (the dot.bomb) I personally would have lost my entire wealth because I was young (& mostly naive)  never imagined stocks could crash! The only thing that helped preserve it was a little Los Altos house we divested. I sure am grateful for owning real estate – I am not a financial planner by any means, but I am conservative and because I’ve seen these recessions I advise my buyers to diversify their portfolios; try to have 6 months to a year’s worth of savings, have savings that are a mix of stocks, bonds, mutual funds but work towards owning property.  the SF Bay Area our homes are not only places to live, but a wonderful wealth generating asset over time. With our current ongoing global uncertainty, including a U.S. stock market correction, no one could have seen coming. We first should do what’s best for our country, and for our families and that is to take care of one another. 

Let’s fight this COVID-19 epidemic together by staying indoors & practicing social distancing, and checking up on loved ones and neighbors. 

 

Lynne MacFarlane says "No Dancing"

Take care of your needs now & let me know if I can help in anyway!

We’ve got this!

Lynne MacFarlane Homes

 

Lynne MacFarlane, MCDM, Realtor, PFAC affiliate

DRE# 02066698

(831) 346-2743 text/voice anytime

 

ArticlesRetirementseniors February 6, 2020

Cities Where Homeowners Haven’t Moved in Decades

When it comes to planting roots, San Francisco area homeowners have some of the deepest in the country (who can really blame homeowners for not moving when they have all of that beautiful California sunshine to soak in?) ☀️

Can you guess which Bay Area City ranked #2 after Detroit?

Find out more in this article from 55 Places.com click here.

Let me know if you or someone you know needs resources to “age in place” I would be happy to help! I have a great network of senior healthcare providers and affiliate services who can help provide a comfortable and safe environment if you chose to stay in your home for 30, 40 or more years!

Lynne MacFarlane HomesLynne MacFarlane, Realtor

(831) 346.2743 text/voice

lmacfarlane@intero.com

Housing MarketSAN MATEO COUNTY February 5, 2020

Q4 2019 Market Overview of San Mateo County – from MLS Listings

San Mateo County – Q4 2019

• In San Mateo County, median sales prices for single family homes rose to an all-time high of $1.544 million.

• Inventories have rebounded slightly from 2017 but are still very low.

• Sales are dismal; the weakest they’ve been since 2008.

• All metrics still point to a very tight market – there are very few active listings, median days-on-market is just 14 and final sales price is consistently well above listing price.

• “Even with prices hovering around $1.5 million, there’s simply nothing to buy.” – Elliot Eisenberg, PhD

• The common interest market in San Mateo is not quite as tight as the single-family market and seems to have loosened up a bit from last year, as seen in median sales price declining from $920k to $901k, and days on market rose slightly. However, inventories remain tight.

 

For private tours & buyer consultation meeting, contact Lynne MacFarlane, Realtor

DRE #02066698

(831) 346-2743 text/voice

lmacfarlane@intero.com

 

 

 

 

Lynne MacFarlane Homes

BuyersHomeownersinvestorstrendsWhy buy January 6, 2020

3 Benefits to Buying Your Dream Home This Year

3 Benefits to Buying Your Dream Home This Year

Outside of a strong economy, low unemployment, and higher wages, there are three more great reasons why you may want to consider buying your dream home this year instead of waiting.

1. Buying a Home is a Great Investment

Several reports indicate that real estate is a good investment, topping other options such as gold, stocks, bonds, and savings. Why? Real estate helps build equity, a form of investing for you and your family. According to CoreLogic’s Equity Report,

“U.S. homeowners with mortgages (roughly 64% of all properties) have seen their equity increase by a total of nearly $457 billion since the third quarter 2018, an increase of 5.1%, year over year.”

This means the average homeowner gained approximately $5,300 in equity over the past year. If you want to start building your equity, put your housing costs to work for you through homeownership this year.

2. Mortgage Interest Rates Are Low

The Primary Mortgage Market Survey from Freddie Mac indicates that interest rates for a 30-year mortgage have fallen since November 2018 when they hit 4.94%. In their latest forecast, Freddie Mac expects rates to remain low, leveling out to a yearly average of 3.8% in 2020.

When you purchase a home at a low mortgage rate, it will impact your monthly mortgage payment, giving you the opportunity to buy more house for your money.

3. Investing in Your Family is a Win

There are some renters who haven’t purchased a home yet because they’re uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you’re living rent-free with your parents, you’re paying a mortgage – either yours or that of your landlord.

Today, rental prices continue to increase, and when you’re paying your landlord’s mortgage instead of your own, you’re not the one earning the equity. As an owner, your mortgage payment is a form of ‘forced savings’ you can use later in life to reinvest in your family. You can use it for a variety of opportunities, such as saving for your children’s education, moving up to a bigger home, or starting your own business. As a renter, it can be more challenging to achieve those types of dreams without home equity working for you.

Bottom Line
Buying a home sooner rather than later could lead to substantial savings and long-term financial growth for you and your family. Let’s get together to determine if homeownership is the right choice for you this year.

Lynne MacFarlane, MCDM, Realtor

lmacfarlane@intero.com

831.346.2743 call/text

Lynne MacFarlane Homes