For Buyers

Will This Economic Crisis Have a V, U, or L-Shaped Recovery?

Published

5 years ago

April 22, 2020

Many American businesses have been put on hold as the country deals with the worst pandemic in over one hundred years. As the states are deciding on the best strategy to slowly and safely reopen, the big question is: how long will it take the economy to fully recover?

Let’s look at the possibilities. Here are the three types of recoveries that follow most economic slowdowns (the definitions are from the financial glossary at Market Business News):

V-shaped recovery: an economic period in which the economy experiences a sharp decline. However, it is also a brief period of decline. There is a clear bottom (called a trough by economists) which does not last long. Then there is a strong recovery.
U-shaped recovery: when the decline is more gradual, i.e., less severe. The recovery that follows starts off moderately and then picks up speed. The recovery could last 12-24 months.
L-shaped recovery: a steep economic decline followed by a long period with no growth. When an economy is in an L-shaped recovery, getting back to where it was before the decline will take years.

What type of recovery will we see this time?

No one can answer this question with one hundred percent certainty. However, most top financial services firms are calling for a V-shaped recovery. Goldman Sachs, Morgan Stanley, Wells Fargo Securities, and JP Morgan have all recently come out with projections that call for GDP to take a deep dive in the first half of the year but have a strong comeback in the second half.

Is there any research on recovery following a pandemic?

There have been two extensive studies done that look at how an economy has recovered from a pandemic in the past. Here are the conclusions they reached:

1. John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

2. Harvard Business Review:

“It’s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (“Hong Kong”) flu, 1958 H2N2 (“Asian”) flu, and 1918 Spanish flu.”

The research says we should experience a V-shaped recovery.

Does everyone agree it will be a ‘V’?

No. Some are concerned that, even when businesses are fully operational, the American public may be reluctant to jump right back in.

As Market Business News explains:

“In a typical V-shaped recovery, there is a huge shift in economic activity after the downturn and the trough. Growing consumer demand and spending drive the massive shift in economic activity.”

If consumer demand and spending do not come back as quickly as most expect it will, we may be heading for a U-shaped recovery.

In a message last Thursday, Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, agrees with other analysts who are expecting a resurgence in the economy later this year:

“We’re forecasting real economic growth of 30% for the U.S. in the 4th quarter of this year and 6.1% in 2021.”

His projection, however, calls for a U-shaped recovery based on concerns that consumers may not rush back in:

“After the steep plunge and bottoming out, a ‘U-shaped’ recovery should begin as consumer confidence slowly returns.”

Bottom Line

The research indicates the recovery will be V-shaped, and most analysts agree. However, no one knows for sure how quickly Americans will get back to “normal” life. We will have to wait and see as the situation unfolds.

For Buyers

Paused Your Moving Plans? Here’s Why It’s Time To Hit Play Again

Published

1 day ago

April 28, 2025

Mark Sincavage

It’s not really a surprise that 70% of buyers paused their home search last year. Maybe you were one of them. And if so, no judgment. Conditions just weren’t great.

Inventory was too low, prices were too high, and mortgage rates were bouncing all over. That made it really hard to find a home you loved – and could afford. And why sell if you’re not sure where you’re going to go?

But here’s the thing: the market’s shifting. And it might be time to hit play again.

The Inventory Sweet Spot

More homeowners are jumping back into their search to make a move this year. Builders are finishing more homes. And together, that’s creating more options for you when you move – maybe even the home you’ve been waiting for.

More homes = more possibilities.

But there’s more to it than that. When you sell, you don’t want to feel like it’s impossible to find your next home. At the same time, you also don’t want inventory to be so high, it takes ages for your house to sell. Right now, you’ll get the best of both worlds.

This data will help paint the picture for you. According to Realtor.com, inventory has jumped 28.5% since this time last year, but it’s still below pre-pandemic levels in most markets – and here’s why this is such a sweet spot (see graph below):

Basically, there are more homes to choose from when you make your move, but not so many that you’ll struggle to sell your current house. Your home should sell quickly if you work with an agent to make sure it’s priced right and prepped to impress.

More options. Less chaos. Solid demand: That’s the real sweet spot.

But here’s something else to consider. Data from Realtor.com also shows inventory has been on the rise for 17 straight months. And experts agree it’s likely to continue climbing throughout the year. As Lance Lambert, Co-Founder of ResiClub explains:

“The fact that inventory is rising year-over-year . . . strongly suggests that national active housing inventory for sale is likely to end the year higher.”

So, this may actually be the best time to sell. Your house may stand out more now than it would as the year goes on and inventory grows even more. Wait too long, and you may be one of many trying to stand out later this year.

Bottom Line

If you’ve been waiting for the housing market to give you a sign – it just did. Whether you’re looking to move up, scale down, or relocate completely, this might be the best balance we’ve seen in a while.

What’s holding you back from taking advantage of this sweet spot? Connect with an agent to talk through it and see what’s possible.

For Buyers

You Finally Have More Options for Your Move

Published

4 days ago

April 25, 2025

Mark Sincavage

Some Highlights

If you put your home search on hold because you couldn’t find anything you liked in your budget, it’s time to try again.
There’s a much wider selection of homes for sale, with more fresh listings hitting the market each month.
With more options come more possibilities. Connect with an agent if you want to see what’s available in your area.

Buying Tips

Should I Buy a Home Now or Wait?

Published

5 days ago

April 24, 2025

Mark Sincavage

At some point, you’ve probably heard the saying: “Yesterday was the best time to buy a home, but the next best time is today.”

That’s because homeownership is about the long game – and home prices typically rise over time. So, while you may be holding out for prices to fall or rates to improve, you should know that trying to time the market rarely works.

Here’s what most buyers don’t always think about: the longer you wait, the more buying could cost you. And you deserve to understand why.

Forecasts Say Prices Will Keep Climbing

Each quarter, over 100 housing market experts weigh in for the Home Price Expectations Survey from Fannie Mae, and they consistently agree on one thing: nationally, home prices are expected to rise through at least 2029.

Yes, the sharp price increases are behind us, but experts project a steady, healthy, and sustainable increase of 3-4% per year going forward. And while this will vary by local market from year to year, the good news is, this is a much more normal pace – a welcome sign for the housing market and hopeful buyers (see graph below):

And even in markets experiencing more modest price growth or slight short-term declines, the long game of homeownership wins over time.

So, here’s what to keep in mind:

Next year’s home prices will be higher than this year’s. The longer you wait, the more the purchase price will go up.
Waiting for the perfect mortgage rate or a price drop may backfire. Even if rates dip slightly, projected home price growth could still make waiting more expensive overall.
Buying now means building equity sooner. When you play the long game of homeownership, your equity rewards you over time.

What You’ll Miss Out On

Let’s put real numbers into this equation, because it adds up quickly. Based on those expert projections, if you bought a typical $400,000 home in 2025, it could gain nearly $80,000 in value by 2030 (see graph below):

That’s a serious boost to your future wealth – and why your friends and family who already bought a home are so glad they did. Time in the market matters.

So, the question isn’t: should I wait? It’s really: can I afford to buy now? Because if you can stretch a little or you’re willing to buy something a bit smaller just to get your foot in the door, this is why it’ll be worth it.

Yes, today’s housing market has challenges, but there are ways to make it work, like exploring different neighborhoods, asking your lender about alternative financing, or tapping into down payment assistance programs.

The key is making a move when it makes sense for you, rather than waiting for a perfect scenario that may never arrive.

Bottom Line

Time in the Market Beats Timing the Market.

If you’re debating whether to buy now or wait, remember this: real estate rewards those who get in the market, not those who try to time it perfectly.

Want to take a look at what’s happening with prices in your local area? Whether you’re ready to buy now or just exploring your options, having a plan in place can set you up for long-term success.