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Home Price Growth Is Returning to Normal [INFOGRAPHIC]

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Some Highlights

  • If you’re wondering what’s happening with home prices, know they’re still rising, just at a slower pace – and that’s perfectly normal for this time of year.  
  • Based on typical seasonality in the market, prices go up most in the spring during the peak buying season, and then price growth slows down as the year goes on.
  • Home prices aren’t falling. They’re just rising slower and going back to normal seasonal trends. That’s a good thing. If you’re curious about prices in your area, reach out to a real estate agent for answers.

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Baby Boomers

Boomers Moving Will Be More Like a Gentle Tide Than a Tsunami

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Have you heard the term “Silver Tsunami” getting tossed around recently? If so, here’s what you really need to know. That phrase refers to the idea that a lot of baby boomers are going to move or downsize all at once. And the fear is that a sudden influx of homes for sale would have a big impact on housing. That’s because it would create a whole lot more competition for smaller homes and would throw off the balance of supply and demand, which ultimately would impact home prices.

But here’s the thing. There are a couple of faults in that logic. Let’s break them down and put your mind at ease.

Not All Baby Boomers Plan To Move

For starters, plenty of baby boomers don’t plan on moving at all. A study from the AARP says more than half of adults aged 65 and older want to stay in their homes and not move as they age (see graph below):

a pie chart with text

While it’s true circumstances may change and some people who don’t plan to move (the red in the chart above) may realize they need to down the road, the vast majority are counting on aging in place.

As for those who stay put, they’ll likely modify their homes as their needs change over time. And when updating their existing home won’t work, some will buy a second home and keep their original one as an investment to fuel generational wealth for their loved ones. As an article from Inman explains:

“Many boomers have no desire to retire fully and take up less space . . . Many will modify their current home, and the wealthiest will opt to have multiple homes.”

Even Those Who Do Move Won’t Do It All at Once

While not all baby boomers are looking to sell their homes and move – the ones who do won’t all do it at the same time. Instead, it’ll happen slowly over many years. As Freddie Mac says:

We forecast the ‘tsunami’ will be more like a tide, bringing a gradual exit of 9.2 million Boomers by 2035 . . .”

As Mark Fleming, Chief Economist at First American, says:

Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they’re going to take about two decades to work their way through.”

Bottom Line

If you’re stressed about a Silver Tsunami shaking the housing market overnight, don’t be. Baby boomers will move slowly over a much longer period of time.

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For Sellers

The Latest Trends in Housing [INFOGRAPHIC]

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a close up of a chart

Some Highlights

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Foreclosures

Why There Won’t Be a Recession That Tanks the Housing Market

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There’s been a lot of recession talk over the past couple of years. And that may leave you worried we’re headed for a repeat of what we saw back in 2008. Here’s a look at the latest expert projections to show you why that isn’t going to happen.  

According to Jacob Channel, Senior Economist at LendingTree, the economy’s pretty strong:

“At least right now, the fundamentals of the economy, despite some hiccups, are doing pretty good. While things are far from perfect, the economy is probably doing better than people want to give it credit for.”

That might be why a recent survey from the Wall Street Journal shows only 39% of economists think there’ll be a recession in the next year. That’s way down from 61% projecting a recession just one year ago (see graph below):

a graph of the economic growth of the economy

Most experts believe there won’t be a recession in the next 12 months. One reason why is the current unemployment rate. Let’s compare where we are now with historical data from Macrotrends, the Bureau of Labor Statistics (BLS), and Trading Economics. When we do, it’s clear the unemployment rate today is still very low (see graph below):

 a graph of a graph showing the number of employment rate

The orange bar shows the average unemployment rate since 1948 is about 5.7%. The red bar shows that right after the financial crisis in 2008, when the housing market crashed, the unemployment rate was up to 8.3%. Both of those numbers are much larger than the unemployment rate this January (shown in blue).

But will the unemployment rate go up? To answer that, look at the graph below. It uses data from that same Wall Street Journal survey to show what the experts are projecting for unemployment over the next three years compared to the long-term average (see graph below):

 a graph of blue bars

As you can see, economists don’t expect the unemployment rate to even come close to the long-term average over the next three years – much less the 8.3% we saw when the market last crashed.

Still, if these projections are correct, there will be people who lose their jobs next year. Anytime someone’s out of work, that’s a tough situation, not just for the individual, but also for their friends and loved ones. But the big question is: will enough people lose their jobs to create a flood of foreclosures that could crash the housing market?

Looking ahead, projections show the unemployment rate will likely stay below the 75-year average. That means you shouldn’t expect a wave of foreclosures that would impact the housing market in a big way.

Bottom Line

Most experts now think we won’t have a recession in the next year. They also don’t expect a big jump in the unemployment rate. That means you don’t need to fear a flood of foreclosures that would cause the housing market to crash.

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The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.