Courtesy of Rentspree.
How is the potential 2020 recession different from 2008?
In 2008, much of the economic downturn was focused on a severely overvalued housing market with a simultaneous sub-prime mortgage meltdown, resulting in cascading foreclosures in markets around the country. For many, the assumption is that a 2020 recession would likely unfold in a similar way, with similar impacts.
The good news, however, is that there is not always a correlation between economic recessions and the US housing market. Note this graphic from the Federal Reserve, which tracks US home prices against historical periods of recession.
Home price index through previous recessions
You’ll note that in both the early ‘90s and early ‘00s recessions, home prices held fairly steady. Many analysts feel that this will be the case for our current economic contraction.
For a variety of reasons, the rental market is poised to strengthen during this time. Why?
Current leases will end and new tenants will need to be found to fill empty rental units.
Empty nesters who have downsized simply don’t have the room for returning college students and laid-off adult children in their smaller homes. They’ll be looking for rentals to accommodate their expanded households.
As job losses mount, young workers will be forced to give up their current rentals or take in roommates to make ends meet. They’ll either need more affordable options or larger rentals to accommodate roommates.
Investors looking for an investment that is more secure than the stock market should stay informed of all opportunities with rental properties. If you’re curious what is available and what would be a smart investment, (and where!) Melanie is here to help you find the property that will yield you the most income and be a timeless choice. Look to Melanie to provide you with a myriad of qualified listings as well as concierge-quality guidance on property management and everything else needed to facilitate your rental property.
