Are we headed for a recession?

A lot of our friends are worried and asking. So we did some research, some reading and this is what we think. (Reverse spoiler alert: the news is not all bad.)

We’re already in a type of recession. Almost over night, the vast majority of businesses world wide are closed or almost closed. It feels awful, like a crash. But that’s the right side of our brains, the emotional side.

Let’s move to the left or “logical” side and look at history and some data. So far, the results of the pandemic are very similar to those caused by the events of September 11th, 2001. The horror of 911 triggered a recession of business, finances, loss of productivity, travel, retail. Life, as we knew it, was changed instantly.

History will likely remember Covid 19 and the pandemic in a similar way: as an “event”, that also changed life as we knew it very quickly.

911 and the pandemic are both events. And THAT is the bright spot at the end of the tunnel. We can recover from events sooner and easier than from long term issues with a system.

So how will this EVENT effect real estate prices? Our chart tells the story. In three of the five past recessions, prices went up. In 2008, the reduction in prices was caused by a problem with the system, not an event. It took years for the problem to surface and then years to bounce back.

This time, we’re living in the results of an event, a virus. It’s biological and NOT a problem with the system. It’s sort of like a really bad snow storm: sooner or later the snow will melt and we’ll be able to work and play and travel and, yes, buy and sell real estate again.

Our advice: sit back and sit tight. This, too, shall pass.