It’s been awhile since we’ve heard the word “recession” spoken about with any real passion. I do believe I’ve been hearing rumors for the past few years or so, but that was more than likely the talking heads trying to sell newspapers. With mortgage rates near record lows and the stock market reacting to the Chinese trade issues, it seems we might be in for some convulsions. Here’s the funny thing; of the last 5 recessions, housing prices actually went up. In 1980, properties appreciated 6.1%. In 1981, we had an increase of 3.5%. 2001 saw a gain of 6.6%! Of the the two times they went down, once was in 1991, with a drop of 1.9%, and a massive devaluation in 2008 of 19.7%. 2008 was clearly a case of irresponsible lending and the discounting of mortgages on the secondary market.
What does all this mean? History tells us that often times when the stock market starts to move back and forth, investors pull out cash and invest in hard assets like real estate. The sudden demand can cause an opposite effect on real estate and push prices up due to lack of inventory. Inventory can decrease due to sellers taking properties off the market with a “wait and see” attitude.
With rates as low as they are, and prices expected to still rise, now might just be the best time to upgrade or make that first purchase. As for income property, my attitude is always the same; if it cash flows, it makes sense. There might be mitigating circumstances that make a particular property a bad choice, but taking advantage of a purchase or exchange with todays rates is a savvy move at this time. I for one am looking to increase my portfolio. As always, contact me if you have any questions or want to discuss your strategy.