Economic Outlook: The Solid Case for a Housing Market That Won't Tank


If concerns about an impending recession are on your mind, you're not alone. Recession discussions have been prevalent over the past few years, raising worries that it could result in a significant spike in the unemployment rate. Some individuals even express fears that a surge in unemployment might trigger a wave of foreclosures, reminiscent of the scenario that unfolded 15 years ago.

Yet, the most recent Economic Forecasting Survey by the Wall Street Journal (WSJ) presents a shift in sentiment. For the first time in over a year, less than half (48%) of economists surveyed now anticipate a recession occurring within the next year:

Economists are turning optimistic on the U.S. economy . . . economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year.”

If over half of the experts no longer expect a recession within the next year, you might naturally think those same experts also don’t expect the unemployment rate to jump way up – and you’d be right. The graph below uses data from that same WSJ survey to show exactly what the economists project for the unemployment rate over the next three years (see graph below):

If those expert projections are correct, more people will lose their jobs in the upcoming year. And job losses of any kind are devastating for those people and their loved ones.

However, the question here is: will there be enough job losses to cause a wave of foreclosures that will crash the housing market? Based on historical context from Macrotrends and the Bureau of Labor Statistics (BLS), the answer is no. That’s because the unemployment rate is currently near all-time lows (see graph below):

As the orange bar in the graph shows, the average unemployment rate dating back to 1948 is 5.7%. The red bar shows, the last time the housing market crashed, in the immediate aftermath of the 2008 financial crisis, the average unemployment rate was up to 8.3%. Both of those bars are much higher than the unemployment rate today (shown in the blue bar).

Moving forward, projections show the unemployment rate is likely to stay beneath the 75-year average. And that means we won’t see a wave of foreclosures that would severely impact the housing market.

Bottom Line

Most economists no longer expect a recession to occur in the next 12 months. That’s why they also don’t expect a dramatic rise in the unemployment rate that would lead to a rash of foreclosures and another housing market crash. If you have questions about unemployment and its impact on the housing market, let’s connect.

2324 Properties
Page 1 of 194
$1,888,000
Neighborhood: Wildgrass
4
Beds
4
Baths
3,827
Sq.Ft.
2019
Year Built
1
Day on Site
A4600221
MLS
$750,000
Neighborhood: Loma Linda Park
4
Beds
3
Baths
2,970
Sq.Ft.
1954
Year Built
1
Day on Site
A4600812
MLS
$539,000
Neighborhood: Villagewalk
2
Beds
2
Baths
1,534
Sq.Ft.
2002
Year Built
1
Day on Site
A4596113
MLS
$479,900
Neighborhood: Lake Sarasota
3
Beds
2
Baths
1,368
Sq.Ft.
1992
Year Built
1
Day on Site
T3503174
MLS
$659,000
Neighborhood: Alinari
2
Beds
2
Baths
1,323
Sq.Ft.
2007
Year Built
1
Day on Site
A4586820
MLS
$349,900
Neighborhood: South Gate Village Green 09
2
Beds
2
Baths
1,239
Sq.Ft.
1970
Year Built
1
Day on Site
A4600049
MLS
$1,150,000
Neighborhood: Turtle Rock
3
Beds
2F11/2
Baths
2,853
Sq.Ft.
1998
Year Built
1
Day on Site
A4600826
MLS
$324,900
Neighborhood: Village Gardens Ph 3
2
Beds
2
Baths
1,074
Sq.Ft.
1982
Year Built
1
Day on Site
A4600729
MLS
$479,000
Neighborhood: Villagewalk
2
Beds
2
Baths
1,693
Sq.Ft.
2002
Year Built
1
Day on Site
A4598493
MLS
$544,990
Neighborhood: Windward At Lakewood Ranch Phase 1
2
Beds
2
Baths
1,530
Sq.Ft.
2024
Year Built
1
Day on Site
T3506783
MLS
Open 2/25
1001 Benjamin Franklin Dr #512 Sarasota,  FL 34236
$510,000
Neighborhood: Lido Towers
1
Beds
1F11/2
Baths
813
Sq.Ft.
1980
Year Built
1
Day on Site
A4600655
MLS
$1,845,000
Neighborhood: The Landings
3
Beds
3
Baths
3,400
Sq.Ft.
2000
Year Built
1
Day on Site
A4600819
MLS

Post a Comment