All the news in 2019 about a recession coming our way has fizzled out and most experts now agree it would be very unlikely. Even Federal Reserve officials saw a decreased likelihood of a recession over the next couple of years, according to minutes from their policy meetings in December 2019.1
Even if so — with the exception of the Great Recession of 2008 — the housing market has weathered other recessions since 1980, as year-over-year existing-home sales growth barely declined in all other previous recession in the last 40 years.2
Because of the the talk of recession, many buyers have been waiting for home prices to drop like they did in 2008. That was a very unique situation and it just won’t happen again anytime soon — if ever. In fact, Goldman Sachs is saying the economy is nearly recession-proof!3
In general, the economy is stronger than it has been in many years:
- In January, the consumer confidence index climbed to a record 131.6, due in part to a strong stock market and unemployment rate resting at a 50-year low.
- For the week ending 1/24/2020, new purchase mortgage application submissions increased 5.0% and refinance application submissions increased 8.0% for a composite increase of 7.2%.
- The Federal Open Market Committee (FOMC) met on Tuesday and Wednesday of last week and voted to leave the Federal benchmark interest rate unchanged. In its statement, the Fed cited muted inflation as the reason to hold rates steady.
- GDP accelerated slightly in the fourth quarter of 2019, with an expansion rate of 2.1%. Though the figure is down from first quarter’s growth rate of 3.1%, consumer spending picked back up in the fourth quarter.
- Consumer spending accounts for two-thirds of GDP growth. In December, personal income increased 0.2% month-over-month and consumer spending jumped 0.3% month-over-month.
Lowest mortgage rates in decades:
30-year fixed rate mortgages:
- In 1971: 7.73%
- In 1974: 9.5%
- In 1981: 18.63%
- In 2000: 8.05%
- In 2007 6.34%
- 2019: 5.34%
- Today: 3.51%
To wrap it up:
There hasn’t been a better time to buy IN YEARS, and may never be again. To put this in perspective, the monthly payment for a $500,000 loan in 1981 was just over $7,500, compared to under $2500 in 2020. Jump on this opportunity. Lock in those rates. Build equity for your future.
- Fed officials saw decreased recession risk at December meeting – Politico
- Housing market not driven by highly leveraged homeowners – The M Report
- What Ray Dalio and other major funds managers thing about a recession – CMC Markets
- The market’s favorite recession signal probably has it all wrong – Wall Street Journal
- “Don’t look now, but Goldman Sachs is saying the economy is nearly recession-proof” – CNBC
- Some content in this article courtesy of: Hammer Mortgage