Experts Predict Recession in 2020

As the year is getting close to the end and we start the fourth quarter, experts start weighing in on predictions for the following year.  We’ve heard several times that a global recession may be near.  Now, housing experts are predicting a housing recession may be near as well.  How near?  Next year.

After the recession back in 2008, the economy started to look up again by the summer of 2009.  We saw significant growth in the economy over the years, new jobs added, and interest rates fall to historic lows.  The decade long expansion is one of the longest uninterrupted growth of the economy.  However, signs of a recession are flashing its bright lights, and the housing market will take a hit.

Based on historical data from previous recessions, one of the biggest warning signs of a recession was based on housing.  The gap between household income and home prices was a clear sign of a recession to come.  Many homebuyers are feeling the stretch, even though wages have been increasing.  The problem is that while wages are growing, they are not growing fast enough to keep up with rising home prices.  Surveys are showing that income has increased about 1.3% from last year, while home prices increased 4.7%.  This large disparity is what is causing many would be homebuyers to continue renting.

According to a survey completed by Zillow, many people believed there were several factors to the reasoning behind the recession in 2008.  Interest rates were between 5-6% during the recession years.  It wasn’t until rates dropped below 5% that the economy began to look better.  Those who completed the survey also pointed out that current political issues and the global economy as a concern.  While currently our rates are still well below 4% and the Federal Reserve cut rates twice, our current global economy isn’t doing so well.  Economists don’t believe the Federal Reserve will be able to “save” us from the looming recession.  They believe it’ll take more than a 175-point basis cut to prevent a recession, which is all we have.  Economists alike do not believe a zero or negative rates will bring anything other than additional challenges and hoops to jump through.

Many experts believe the recession will hit by the next election.