How will Real Estate be Affected During the 2020 Recession?

Looking back at previous recessions and depressions, especially the 2007-2008 and its fallout, we see a history proving that the impossible can and did happen suggesting that this could be a very real possibility of what is happening now in 2020 and beyond.

Right now, as of June 2020, the current recession already has had negative impact by breaking most all collapsing economy records. This is not particularly because of the expected recession but is brought about more by the huge negative economic impact that the pandemic has had on all world economies.

Most everyone was aware that an economic ‘correction’, both in the financial and real estate markets, was eminent. The question that was bothersome was, “When?” Historical data shows the convergence of many economic indicators pointing to the second quarter of 2019 as the predicted beginning of a correction. These indicators, for the most part, were pointing to that particular quarter as the beginning of the expected recession. Depending on where the advice came from, some expected a very short recession while others expected a huge, long-lasting situation.

Everyone was wrong. As time passed the second quarter, then the third, then the new year 2020, nobody could make sense of how and why the financial markets had not tanked. Real estate prices had stopped their climb and levelled off. Many locations around the country showed slight dips in real estate, some even more, but listings sold, and sales were made without too much pain.

Then, beginning in February, the seriousness of a world-wide panic, brought on by COVID-19, began to affect local economies. People’s routine lives were interrupted, and a fear of possible personal mortality prevailed. Most people, for the first time, were facing the possibility of their own death.

What has changed since February is that over about 44% of businesses are out of business permanently, job losses are over 30 million, many deaths have occurred, and mandatory governmental quarantines have meant psychological difficulties for many.

Regardless of whether current moves toward relaxing shelter-at-home mandates will cause a rebound of the virus or result in increased resistance in the population, it will still take years for the economy go get back to its normal cycle.

Most everyone has adopted and adapted to different lifestyles. Families have been brought together under one household and have learned to adjust. They may embrace a continuation of central family living. Some may consider buying a larger home so they can bring more family together.

Others have become very lonely locked down by themselves, desperately desirous of human contact. They vow to never be caught like this again and when quarantine is lifted, they will proceed to more communal living.

Unfortunately, most everyone is facing economic turmoil, including eviction or foreclosure for non-payment. Trying to stay safe and keep food on the table during this lockdown has depleted their financial abilities and affected credit ratings.

There are huge numbers of people here on work visas who have no choice other than to move back to their home countries, leaving their mortgaged homes behind, due to job loss. Thousands within this sector were highly-educated, key employees in High Tech companies. Their real estate defaults will only contribute to the expected downfall.

All indications point to a massive depreciation of real estate values, with very few solutions available.

Any U.S. property owner who is having difficulties involving real estate should know that there are solutions available for any given situation.

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