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Homebuyers are bracing for a recession: Study

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More than a third of U.S. homebuyers believe a recession is coming next year, according to new data from realtor.com, with many also saying they’ll halt their housing search if or when a downturn finally arrives.

The data was gathered this month via a survey of 755 people, and it shows that more than 36 percent of active homebuyers now expect a recession sometime during 2020. That’s a jump of more than 6 percentage points from earlier this spring, when a similar survey found that less than 30 percent of homebuyers were bracing for a downturn. The numbers indicate that fears of economic hard times, at least among people in the market for a home, are rising.

Realtor.com also found that 17 percent of homeshoppers today expect a recession this year, while 14 percent expect one in 2021.

Additionally, almost 56 percent of realtor.com’s survey respondents said that they’d stop their home search during a recession and wait until economic conditions improved.

The new survey results come on the heels of near-ubiquitous coverage in recent weeks of economic instability and a possible downturn. Fears have been fueled by an inverted U.S. Treasury yield curve, a key economic indicator that has historically foreshadowed recessions, as well as President Trump’s tariffs on foreign goods and the resulting trade war with China.

George Ratiu

George Ratiu, a senior economist at realtor.com, said Tuesday in a statement that “undoubtedly, we will face another recession at some point in the future” because economic activity is cyclical. However the good news, according to Ratiu, is that conditions this time around shouldn’t be as bad as they were during the Great Recession of 2008.

“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,” Ratiu explained.

“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.”

Consumers seem to agree, according to realtor.com’s data.

“Nearly 44 percent of current shoppers feel an upcoming recession will be less severe than 2008, up from 40 percent this past spring,” realtor.com revealed in a statement. “Twenty-two percent feel it would be the same.”

Though economists don’t know exactly when the next recession will arrive, Ratiu ultimately compared the situation to preparing for a storm and advised consumers to get ready now.

“Taking steps to shore up their financial well-being, strengthening their professional networks and having adequate savings,” he explained, “would provide cushioning during the slowdown.”

Email Jim Dalrymple II

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