Though the weather seems to be cooling off, the housing market appears to have no sign of cooling off, yet. In Colorado, the housing inventory in the residential market hit a four-year high, up 11.79 percent from last year. Going back even further, the last four years has demonstrated the strongest sellers’ market in recorded history. The benefits are twofold. Even with the supply lower than demand, the available homes increased to the highest levels which gives buyers more homes to choose from. Also, the demand for homes has sellers smiling, with the rate of price growth holding strong in the 3rd quarter. In both conditions, the market conditions still favor the home seller, with a predicted increase as buyers try to find a home for the holidays.
Having said that, there has been a notable increase in “days on the market.” In addition, the real estate market is signaling a slowdown in the rate of price growth. These subtle shifts in the market have experts predicting a cool down. For years, the housing market has emulated a runaway train, with no signs of slowing down. But at the end of every charging train, could be the end of the track. The DMAR (Denver Metro Association of Realtors) has begun to assess more signs of cooling with inventory increasing, and the median sale price decreasing. That said, the “bubble” doesn’t necessarily show a sign of a pop, more like a decrease in volume. If in fact the housing markets decreases, there will be a gradual decline that will be far less startling than the last time the market crashed. Also, experts are cautiously optimistic and scrutinizing the market to better prepare the buyers and sellers, to lessen the gradual effect of the next recession.
Nationwide, experts are predicting that the next recession is on the horizon in the next couple years. Though home values are continuing to climb, a notable panel of 100 real estate economists and experts predict that the trend will continue in the interim, but there is 52 percent probability of the next recession starting by the end of 2019. If the end of 2019 come and goes, the predictability percentage jumps to 73 percent, with the next predicted recession starting by the end of 2020.
In a far-reaching prediction, two-thirds of panel experts believe that a geopolitical crisis is likely to be a major catalyst for the next recession. This prediction would be a rare occurrence. Experts reached this prediction by applying the opposite mindset of the terrorist attacks in 2001, and how the event was determined to prolong the recession. In this case and others, most sustained downturns, have not started with a geopolitical crisis. Comparatively, this trigger outweighed other trigger predictions like monetary policy, stock market corrections, and political gridlock.
Notwithstanding of the predicted recession or the reasons therein, the panel expects the next recession to have only a moderate impact on U.S. housing. The most affected cities would be the usual suspects like San Francisco, Miami, Los Angeles, New York, San Diego, and Seattle. All things considered, even the most pessimistic of experts still predicted an overall annual growth rate for the next five years.
One thing that the experts can agree upon is that the housing market will continue to grow, because the demand is driven by low inventory. When the demand stabilizes with the supply, we will see a major slowing, but not a halt. Dave Ramsey even predicted that for most cities, the risks associated with the crash in the market is low. The rapid upward trends have people wondering, and caution is vigilance. However, don’t let the inevitable possibility of a crash in the future, deter you from the probability of an excellent buying or selling opportunity now.