Recession? Housing Bubble? More Price Increases? What's the deal?

Common Real Estate Questions I'm hearing these days...

Kim, are these home prices sustainable?

Do we dare use the R word (recession)?

Certainly, this is a housing bubble, right?

Well, Colorado is continuing to see price increases across the state. In the seven-county metro area. Single-family homes hit a record median sale price of $615,000. That is a 27% increase from March 2021, according to the most recent report from the Colorado Association of Realtors.

The truth of the matter is... no one really, truly knows what is to come. The US economy grew at a phenomenal, historic 7% rate in the last quarter of 2021. GDP grew about 5.7% in 2021, more than double what we used to term 'strong' growth. We should EXPECT this to slow down. This phenomenal growth has fueled a huge imbalance in supply and demand in almost all things, resulting in price gains. No-one knows when a recession might happen although there is one certainty: a slowdown and recession is coming, but it's impossible to time these things accurately. All growth periods are followed by a slowdown. It could be in 2022, or 2023, or later.

If you walk away with any certainty… know that all recessions are not a GREAT recession. Minor recessions can turn around much faster. Recently Forbes showed the average period of economic growth lasted 3.2 years while the average recession lasted 1.5 years – an average of 4.7 years for the full cycle.The stock market prices in expectations as investors look forward, about 6 months on average, to anticipate what’s coming and decide what prices they’re willing to pay. The Tech Bubble fueled recession of 2001 lasted 8 months. The Great Recession of 2008-9 lasted 18 months. The Covid recession lasted just 2 months, the shortest in U.S. history.

It's important for us not to get bogged down by these matters and continuously speculate what’s to come. We have to remember recessions are simply an indicator of lower spending and growth, not the stopping of markets. Markets and life continue and so should you. If anything, enjoy all that equity you’ve gained over the last two years, and consider putting it to work. Takes money to make money, and right now is the right time to use it wisely.