Don’t panic, a looming recession may be good news for those wanting to sell their homes. The experts say this recession may happen in 2020, so there is still plenty of time to make plans for how to deal with a potential economic downturn.

In many parts of America, especially in popular cities, the real estate markets are super hot for sellers. Home sales are coming in at prices that are record highs. For sellers in these hot markets, it might be time to sell. For buyers, able to wait until next year, the prices may come down.

What The ‘Experts’ Say

A Pulsenomics survey of 100 real estate market experts says that the pressures on the economy, which are negative, are not coming from the housing market this time. In fact, the Federal Reserve announced it will not make any changes until 2021, so the financial market supporting home loans will be coasting along pretty much as it is now.

The damage to the U.S. economy is coming from the delayed effects of the tariffs. Whether one agrees or disagrees with the tariffs is not the issue. The tariff changes that already went into effect, will have an economic impact next year or the year after.

Economists use the analogy of observing a big, slow-moving tidal wave. Scientists can see it coming from miles away. If those potentially affected by the danger pay attention to the warnings soon enough, they may have a chance to get out of the way.

Half the experts see the tariffs having a significant impact in 2020. Most of the other half see it coming in 2021. Nobody thinks the recession will hit before the end of 2019.

Summer 2019 – Selling Time

Home sales toward the end of summer are usually the strongest when compared to other times of the year. After returning from vacation, and before school starts, it is a popular time to look for a home when the weather is still nice outside.

Next Year 2020 – Buying Time

If a recession hits in 2020, then home sales prices may go down due to lowered demand. Again, this may be helpful for buyers who wait until next year to buy a home.

Conclusion

It is interesting to see that any possible recession will not be caused by the housing market this time. Real estate experts think that the housing market will price-in the effect of the recession up to one year ahead of when it hits.

If there are plans to sell a home, such as going into retirement and wanting to downsize or buy an RV for a happy retirement traveling, now may be an opportune time to consider selling.

If there are plans to buy a home and there is no rush, just take the time to work with your real estate agent to get a good deal and wait for a possible overall economic slowdown to get a better price. And be sure to contact your trusted home mortgage professional to discuss your financing options.

The most expensive home sold in America, so far, was a New York penthouse that sold for $238 million in January 2019. It is on the top of a building that overlooks Central Park. The 26-story luxury condo building designed by Robert A. M Stern is nearly all sold out.

Who Has That Kind Of Money?

The proud buyer of the penthouse is Ken Griffin. His net worth is estimated to be $9.6 billion. He is the founder of the Citadel hedge fund. Griffin is 50 years old. A few days before buying the NYC penthouse, he closed on a home in London that overlooks St. James Park near Buckingham Palace. For that 200-year-old home, he paid just a paltry $122 million.

Griffin’s New York penthouse is 22,000 square feet of ultra-luxury living. It sold for more than twice the amount of the second palace record-holder in America. That is a penthouse on the One57 building, which sold for $100.5 million in 2014.

Boom Or Bust?

One might think that a penthouse sale setting a new almost unfathomable record would indicate a vibrant bullish market in New York residential real estate. Well, not exactly. It did raise the median sales price of a residential sale in New York City to over $1 million from being below this amount at the end of 2018. Prior to this sale, the median price was trending lower.

Forbes reports that the current economic trends are not normal. Usually, the NYC real estate market goes up when the stock market is up. However, the NYC residential real estate is down in spite of the robust economy.

Properties selling for top-dollar at prices that are hard to imagine could be a sign of a real estate market collapse. In general, the NYC residential market has been in a steady decline over the past year. The lowest number of closings in a decade happened during the first quarter of 2019.

Investor Uncertainty

There is a general sense of uncertainty for residential buyers in NYC, where the average one-bedroom condominium sells for over $1 million. Uncertainty makes potential buyers take longer to decide on making a home purchase in the Big Apple.

Add to this uncertainty, there is the new “mansion tax” that was approved by New York City as part of its budget in April 2019. The mansion tax is now 1% on residential sales of $1 million or more that goes up to a maximum of 4.15% on homes sales of $25 million and up.

Did you just do the math? Griffin would have paid $9.87 million for the new mansion tax if he waited until April 2019 to buy his penthouse. So maybe he feels like he got a bargain by saving nearly $10 million on the purchase?

Summary

In spite of the record price for the penthouse sale in NYC, the residential market continues to soften. The new mansion tax is not going to help sales either. Unless you have money to burn, as Griffin does, it may not be the best time to invest in residential properties in NYC if you hope to make a return on your investment when selling them.

Your trusted home mortgage professional is well-informed about the market trends in your area. Be sure to set up an appointment if you are in the market for a new home or interested in refinancing your current property.