All this summer people have been buzzing about a recession. Word around is that there are experts and non-experts alike debate about when it’s coming, or if it’s already arrived.
With lowered employment, downward economic trends, a recession can last anywhere between months to even years. Investors have put a pause to their stocks, people are thinking twice about quitting their jobs. And what’s on every homeowner’s mind right now is the memorable recession of 2008 that utterly destroyed the housing market.
So what does the “recession” today mean for our homeowners and real estate investors?
What happened in 2008?
Well, the housing downfall first began in 2007. When supply of houses rose faster than the rate of demand. Homeowners who could not afford to make their mortgage payments became trapped as they also couldn’t afford to sell their homes. Funded by the credit market, the banks stopped lending to one another as they were overleveraged and the credit market fell apart with their institutions.
So the question is, will the recession today be the same as 2008?
How is the 2022 Recession Different for Real Estate?
Our hypothetical 2022 recession could be attributed to high inflation, rising interest rates, and volatile economic activity. These are problematic factors but one major component that hasn’t shifted is supply and demand within the housing market.
The primary drivers behind the real estate prices are through supply and demand and not the economic state.
For the past 10 years BC has been in a supply deficit for homes despite the abundance of buyers. Furthermore, Canada is in need of people in this country and the government is in no position to stop immigration. So long as there is immigration, the demand for real estate will remain relatively stable.
It’s also important to note that the oncoming recession of 2022 continues to remain a possibility and not an inevitable event.
What is inevitable would be the populations for many cities across British Columbia growing rapidly over the next few years.
So Should I Buy or Sell Real Estate in 2022?
In my opinion, it is a good time to buy because real estate has always been a long term investment, you’re holding your investment for years, not for months. Before investing in real estate you should be fully prepared to hold onto the property for years to come.
In the end, if you invest wisely, your investment will pay off.
Work with a real estate group that can help you make the right investment decisions, and invest with confidence.