Homebuyer confidence is dropping, and more than half of current house hunters plan to put their home search on hold until the economy recovers, according to survey data released this week by Realtor.com.
The survey this month by Toluna Research found that more than 36 percent of 755 active home buyers expect the U.S. to go through a recession next year. This is up by about 6 percent when shoppers were asked the same question this past March.
An additional 17 percent of house hunters expect a recession to hit sometime this year, while 14 percent think it will start in 2021.
And while 44 percent of those surveyed think the next recession will be less severe than the Great Recession of 2008, nearly 56 percent of those surveyed said they would stop their home search if there was an economic slowdown.
Unlike the 2008 Great Recession, housing will not be the cause, however, and will most likely be precipitated by trade wars with countries like China and Mexico.
"The next recession will likely be driven by factors outside of housing, such as a prolonged trade war, cutbacks in corporate spending or contagion from a European recession," George Ratiu, senior economist at realtor.com, said in a statement. "Unlike 2008, mortgage underwriting has been more disciplined and regulated, which should provide a more secure foundation for housing during the economic ups and downs."
In New York City, where the sales market has been slowing, agents aren't too worried about how a recession, will affect housing.
Michael J. Franco, a broker with Compass, thinks it's a good time for buyers to pull the trigger while others hold off because of recession jitters. "The New York market started softening in 2016 so we are three years into the real estate market correction," Franco says. "Historically in New York, prices don't drop drastically so I believe it is a good time to buy especially if more wait by the sidelines because of recession jitters. Historically, recessions don't last forever, so if you can afford your monthly payment after buying you should fare well post recession."
Steven Gottlieb, a broker with Warburg Realty, agreed that timing is everything for an investment, and that if a person can afford it, it makes sense to purchase a home while prices are softening and interest rates remain low — both of which are happening now.
"People who purchase property in the direct aftermath of a recession, or catastrophically paralyzing event like 9/11, tend to do quite well on their purchase prices, and can then ride the value of the property upwards as the economy rights itself again," Gottlieb said. "In 2009, after the 2008 falls of Lehman Brothers and Bear Stearns and general collapse of the housing and RMBS markets, buyers did extremely well. If they were smart or lucky enough to hold tight and then sell in 2014 or 2015, as we headed toward an election year, they struck gold."