Talks of Recession Surfacing with Government Shutdown | Take Me Home | Bend | The Source Weekly - Bend, Oregon

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Talks of Recession Surfacing with Government Shutdown

Worries expressed about housing market



This past week, numerous headlines have emerged about prolonged government shutdowns leading to a recession. With the 2008 recession still fresh in everyone's mind, the word "recession" makes people think of another housing recession. While some prominent economists have talked about an economic recession, housing has not been a concern because strict lending regulations were put in place to prevent the same situation.

Most industry writers feel that because we have high demand for housing, things could slow down a bit, but the high demand and inventory shortages will continue to make prices go up. A study of home price behavior during the last five economic recessions showed that home prices declined in 1990 and 2008. The decline in 1990 was less than 1 percent and during the other three recessions in 1980, 1981-82, and 2001, home prices actually went up.

While affordability continues to be an issue, overall, the market appears stable—and based on recent historical data on recessions, it's likely that our next recession may have only a minimal effect, if any, on housing price declines. At the time of this writing, Freddie Mac reported our mortgage rates were at the lowest rate in nine months at 4.45 percent, despite the rise in interest rates by the Federal Reserve—so there definitely is good news countering the fears of bad news.

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