Do recessions have affected real estate prices? What do you think?
Let’s take a look at history to see what the numbers say. In a recession, the Gross Domestic Product (GDP) goes down and the economy is affected, but that is not always true of real estate prices.
Here are some statistics regarding GDP and how real estate prices were affected by past recessions:
|PERIOD OF RECESSION||GDP||Real Estate Prices|
|January 1980 – July 1980||Down 2.2%||Up 4.5%|
|July 1981- November 1982||Down 2.7%||Up 1.9%|
|July 1990 – March 1991||Down 1.4%||Down 0.9%|
|March 2001 – November 2001||Down 0.3%||Up 4.8%|
|December 2007 – June 2009||Down 5.1%||Down 13.1%|
Isn’t it interesting to notice that real estate prices have risen often gone up during a recession? All other recessions except the Great Recession saw an increase in real estate sales prices.
The Great Recession of 2007-2008 was greatly impacted (if not caused) by the lack of legislation around mortgage lending, and the practice of giving mortgages to anyone that could fog a mirror. That is no longer an issue with tighter regulations on lenders and the Dodd-Franks legislation. Let’s hope that the next recession will have a neutral impact on the real estate market.