In addition to the mostly glum news about the likelihood of a downturn in the nation’s economy, you’ve probably also heard a blanket pronouncement for residential real estate that’s not so rosy. Based on the probability that we’re in for at least a short recession, at first glance that would seem to justify headlines like “Morgan Stanley: Home Price Declines Are Coming in 2023”—and even last week’s “When Will Housing Prices Drop?”
Not even IF, but WHEN!!! (Thanks a lot, U.S.News & World Report).
Dubious Connection: Recessions-Palm Beach Homes for Sale
But hold on for just a moment. If you’ve been mentally rescheduling putting your Palm Beach home for sale until a later time when the economy rebounds, there is a piece of information that’s missing—one that might change your mind. This was last publicized three years ago when some broad economic indicators looked equally gloomy. It pointed to a different conclusion.
CoreLogic’s ‘Economic Observation’ appeared in March of 2019. It examined the data from the Standard & Poors Shiller Home Price Index, unearthing “several reasons to be optimistic” despite the Index’s affirmation that house prices had fallen “for seven straight months.” It included a graphic that traced annual price changes from October 1978 until the most recent point—data that put the lie to any ‘this-therefore-that’ connection between national recessions and house prices. Examples like, “during the 1980 and 81 recessions, prices grew by 6.1%” and “home prices grew 6.6% during the Dot-Com recession” made it seem a lot more accurate to predict that in any future recession, a corresponding Palm Beach home price dip would be the exception rather than the rule.
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Nobody can ever be certain about the direction of future markets, but it’s vital to understand (and believe) that this is demonstrably true for predictions of downturns as well as upturns. Delaying the listing of your Palm Beach house because a recession might be imminent wouldn’t seem to be a very persuasive reason. Call me at (561) 316-6800 whenever you’d like to check up on how our own residential market is performing as we near the historically strong busy season!
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