Why There Won’t Be a Recession That Tanks the Housing Market

<article class="post-960533 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-960533"><span class="entry-date">March 5, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">Why There Won’t Be a Recession That Tanks the Housing Market</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Why+There+Won%E2%80%99t+Be+a+Recession+That+Tanks+the+Housing+Market&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhy-there-wont-be-a-recession-that-tanks-the-housing-market%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Why There Won’t Be a Recession That Tanks the Housing Market Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240305-Why-There-Won-t-Be-a-Recession-That-Tanks-the-Housing-Market.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>There’s been a lot of recession talk over the past couple of years. And that may leave you worried we’re headed for a repeat of what we saw back in 2008. Here’s a look at the latest expert projections to show you why that isn’t going to happen.  </p>
<p><a href="https://www.builderonline.com/data-analysis/how-the-election-and-unemployment-could-impact-the-2024-housing-market_c" rel="noopener noreferrer" target="_blank">According</a> to Jacob Channel, Senior Economist at <em>LendingTree</em>, the economy’s pretty strong:</p>
<blockquote><p><em>“At least right now, the fundamentals of the economy, despite some hiccups, are doing pretty good. While things are far from perfect, </em><strong><em>the economy is probably doing better than people want to give it credit for</em></strong><em>.”</em></p></blockquote>
<p>That might be why a <a href="https://www.wsj.com/economy/economic-forecasting-survey-archive-11617814998" rel="noopener noreferrer" target="_blank">recent survey</a> from the <em>Wall Street Journal</em> shows only 39% of economists think there’ll be a recession in the next year. That’s way down from 61% projecting a recession just one year ago (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-More-Economists-Now-See-a-Soft-Landing.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of the economic growth of the economy" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-More-Economists-Now-See-a-Soft-Landing.png"/></a></p>
<p></p>
<p>Most experts believe there won’t be a recession in the next 12 months. One reason why is the current unemployment rate. Let’s compare where we are now with historical data from <a href="https://www.macrotrends.net/countries/USA/united-states/unemployment-rate" rel="noopener noreferrer" target="_blank"><em>Macrotrends</em></a>, the <a href="https://www.bls.gov/news.release/pdf/empsit.pdf" rel="noopener noreferrer" target="_blank"><em>Bureau of Labor Statistics</em></a> (BLS), and <a href="https://tradingeconomics.com/united-states/unemployment-rate#:~:text=Unemployment%20Rate%20in%20the%20United,percent%20in%20May%20of%201953." rel="noopener noreferrer" target="_blank"><em>Trading Economics</em></a>. When we do, it’s clear the unemployment rate today is still very low (<em>see graph below</em>):</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-Unemployment-Rate-Near-All-Time-Lows.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of a graph showing the number of employment rate" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-Unemployment-Rate-Near-All-Time-Lows.png"/></a></p>
<p></p>
<p>The orange bar shows the average unemployment rate since 1948 is about 5.7%. The red bar shows that right after the financial crisis in 2008, when the housing market crashed, the unemployment rate was up to 8.3%. Both of those numbers are much larger than the unemployment rate this January (<em>shown in blue</em>).</p>
<p>But will the unemployment rate go up? To answer that, look at the graph below. It uses data from that same <em>Wall Street Journal</em> <a href="https://www.wsj.com/economy/economic-forecasting-survey-archive-11617814998" rel="noopener noreferrer" target="_blank">survey</a> to show what the experts are projecting for unemployment over the next three years compared to the long-term average (<em>see graph below</em>):</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-Unemployement-Expected-to-stay-below-5-percent.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of blue bars" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240304/20240305-Unemployement-Expected-to-stay-below-5-percent.png"/></a></p>
<p></p>
<p>As you can see, economists don’t expect the unemployment rate to even come close to the long-term average over the next three years – much less the 8.3% we saw when the market last crashed. </p>
<p>Still, if these projections are correct, there will be people who lose their jobs next year. Anytime someone’s out of work, that’s a tough situation, not just for the individual, but also for their friends and loved ones. But the big question is: will enough people lose their jobs to create a flood of foreclosures that could crash the housing market?</p>
<p><strong>Looking ahead, projections show the unemployment rate will likely stay below the 75-year average. That means you shouldn’t expect a wave of foreclosures that would impact the housing market in a big way.</strong></p>
<h3>Bottom Line</h3>
<p>Most experts now think we won’t have a recession in the next year. They also don’t expect a big jump in the unemployment rate. That means you don’t need to fear a flood of foreclosures that would cause the housing market to crash.</p>
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