Next Recession in 2020? What Will Be the Impact? | MyKCM

Economists and analysts know that after a decade of economic growth, a recession cant be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next economic downturn or recession:

Experts largely expect the next recession to begin in 2020.”

This statement agrees with a separate economic study by the Wall Street Journal:

“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”

The graph below compares the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:

Next Recession in 2020? What Will Be the Impact? | MyKCM

Recession DOES NOT Equal Housing Crisis

Now keep in mind, a recession doesn't necessarily mean there is a threat to housing. By definition a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Though the housing crash of 2008 caused the last recession, during the previous five recessions home values appreciated.

 Next Recession in 2020? What Will Be the Impact? | MyKCM

According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:

  • Monetary policy
  • Trade policy
  • A stock market correction

A housing market correction was ranked ninth in probability. Those same experts also projected that home values would continue to appreciate in 2019, 2020, 2021 and 2022.  

Others agree that housing will not be impacted like it was a decade ago.

Mark Fleming, First American’s Chief Economistexplained:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

And U.S. News and World Report agreed:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

The Takeaway

A recession is probably less than two years away. A housing crisis is not.