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Has the Recession Started, Yet?

Photo by Andy Abelein on Unsplash

While you’ll never get just one answer to that question, here’s one more possibility.

All booms come to an end eventually. There is an undeniable link between home sales volume and pricing. Typically, when more homes sell, prices rise 12 months later. When fewer homes sell, prices fall back 12 months after.
The currently unsustainable, slowing sales and rising interest rates imply prices will fall back in 2019-2020.

We feel the cyclical peak for California home prices already occurred in the third quarter of 2018.

So far in 2019, the Federal Reserve is continuing their process of raising interest rates to cool off the economy and induce a business recession.  Despite slowing of interest rate increases, experts expect the effort will continue to pull prices down through 2019 and into 2020, with a bottom likely in late 2020 or early 2021.

Further reading: https://journal.firsttuesday.us/todays-housing-boom-is-one-of-the-largest-in-history/66318/

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