More than 100 housing experts surveyed by Zillow generally agreed that housing prices won’t face a big downturn. But a mild recession may be in play later this year or in 2023, they believe.

We’re probably not in the next housing bubble — and even if we were, a “burst” probably wouldn’t sting too much.

That’s the consensus of a group of 114 economists and housing experts polled recently by Pulsenomics for Zillow’s Home Price Expectations Survey

Instead of worrying about a possible bubble, most of these experts are keeping their eyes on the chances of a small recession. Approximately 3 out of 4 of these experts expect the economy to contract for multiple quarters in either 2022 or 2023 as the Federal Reserve takes big steps to fight consumer price inflation.

It’s unclear how such a recession would affect the real estate industry at this particular moment, Zillow economist Nicole Bachaud said in the report. 

“Although the Great Recession was triggered by a housing crash, it’s an outlier in the grand history of recessions, which have often strengthened investment in housing due to its relative stability as an asset,” Bachaud said. 

Approximately 60 percent of these experts believe today’s housing prices aren’t decoupled from market fundamentals, but are explained instead by factors like supply and demand that are backed by mostly sound lending practices. 

By comparison, 32 percent of those experts believe there is a housing bubble, while the remaining 8 percent said they were unsure. But most of these skeptics expect such a bubble would resolve in a relatively mild home-price correction, not a severe burst.

Experts believe the pace of price increases are nearly certain to slow, even if prices themselves don’t come down. The recent spike in mortgage rates — which now exceed 5 percent — will see to that, Pulsenomics founder Terry Loebs said in the report.

Still, the experts believe there’s some resilience in today’s prices, he added.

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant,” Loebs said.

The group of experts who said a bubble is unlikely mostly pointed to the bevy of market factors that are contributing to higher prices for homes. Demographic shifts, depleted inventory and changes in buyer preferences were among the most common reasons the experts provided.

Experts also pointed to the high qualifications of the average borrower and the fact that the vast majority of mortgages taken out in recent years have been fixed-rate, fully amortized loans.

On the other end of the spectrum, the economists and other experts who worry about a recession pointed to a unique cocktail of factors that undermine housing affordability. Record-high home prices — a product of a historically low interest rate environment — are finally mixing with today’s newly resurgent mortgage rates.

Email Daniel Houston

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