Since we could not decide as to whether we are in a recession right now, many have adopted the term “housing recession” instead. While we are not sure what constitutes a housing recession, we really need to view today’s real estate market in terms of where the market is coming from. Certainly, the past few years have been red hot in the real estate sector.
Today, the market is not as hot. But “not as hot” is a long, long way from a housing recession. For one, housing prices are still holding up well, which is quite surprising considering the steep increases of the past two plus years. Secondly, we still have a general housing shortage in the United States because we have not built enough homes to keep up with our household formation. Demographics do not lie.
However, one point is clear. As housing goes, so does the economy. We have had robust economic growth since the pandemic-induced recession in no small part due to tremendous demand for real estate. Now that this demand has cooled somewhat, it makes sense that our economy would slow down. And if and when there is a recession, we would expect that housing will be the primary sector expected to help us get the economy going again. As housing goes, so does the economy.