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    Do Politics Affect the Housing Market?

    Hi. Today I want to talk about the recession politics and the housing market. Hi this is David Pestana owner of Rise Utah realty in Orem. I want to share with you what I love Utah County join me as we explore the restaurants businesses community events and incredible geography here. This is Utah County Life. all right. Thanks for watching today’s episode. There’s so much to talk about. And before we get started please subscribe here so that we can hear from you and you can follow our content. And if you have any questions while you’re watching this please comment below so I can answer directly to you. Now to get started. There’s a lot of talk this year about a recession. More and more people are saying that a recession is coming. And I wanted to talk about that because I think with this being a political election year coming we are going to hear a lot of of disaster talk and a lot of positive talk and you’re not going to be sure quite what to believe now in November of 2020 about 15 months away. We’re going to be electing a new president. So the Democrats and the Republicans are on the on the campaign trail is that what they call it to win your vote. And what the reset what the Republicans want you to know is that they’ve done a great job for the economy that the last seven years have been the longest recovery in history. Things are good things are still good. And anything that may be a downturn they’re going to diminish the role of the Democrats on the other hand are going to tell you that look you know may have been a good run but man because of Trump and his politics you know things are going down and if you elect me things are going to be better and I can solve these problems and issues and social problems for you you know. And I’m not trying to talk either side here but I think that’s a lot of what we’re going to hear over the next 15 months until Election Day and the way it affects the recession is is I don’t know if they’re really going to talk about the recession but they just want your vote. And so they’re not necessarily going to give you like the reality of what’s happening like if I was a Republican I would downplay what’s happening if it’s a recession and talk if I’m a Democrat I would want to scare you into thinking that this recession is terrible and you’ve got to vote for me. So either way you know you’re going to hear these two sides over the next 15 months. And when we talk about recession you know what we’re really talking about by definition is when there’s two consecutive quarters of slowing or negative growth in the economy. So we’re retracting and quite frankly we’re recession probably is coming. I mean it’s it’s bound to you know when we’ve seen basically seven straight years of positive housing growth. And if you live here in Utah you know that the housing market is super costly right now. We do need to take kind of a leveling off effect where we can breathe people’s jobs and incomes could catch up with the market. But what I want to emphasize here is that most people when they hear the word recession they associate it with crashing housing market in and they think of that because the last recession or this great recession or depression that we had was actually caused by the housing market in fact to be more specific. There was a lot of fraudulent lending they were giving loans to people who couldn’t afford it. People who had bad credit they were giving subprime loans too. And what this amounted to was kind of a stack of cards that fell. So as soon as the price hit its tipping point and it started to go down people didn’t have equity in their homes they actually couldn’t afford the houses on these high mortgages and it all crashed. And so the recession was all started through the housing which was related to the stock market and everything. But it’s all done now. What we’re looking at is a much much stronger housing market. And you know everybody has to prove their income. There is no subprime. So the housing is has a much much stronger base supported by real jobs. And the difference here is that if we go into a recession it’s probably not going to be caused by the housing market. In fact I saw a list and you know maybe trade war you know economics could be right up there at one or two and then all the way at number nine. It actually says housing market could cause it. So nobody really thinks that the housing market’s going to cause the next recession. In fact quite the opposite because of the strength of the base of the housing market. They feel that if a recession was caused what was in the United States housing market would actually help pull it out of the recession not into it. So I want to show you some evidence of that and that not all housing recessions mean a housing crash. All right. I have a graph here that shows the last five recessions. And what you’ll notice is that out of the 5 3 of them show that there was actually from the start to the finish of the recession. There was no decline in housing prices. And this is this is a general term throughout the whole United States. So for four five recessions three of them did not affect housing price and but the most recent one which you’ll see which started in 2008 really started in 20s 2007. But the stock market everything crashed in 2008 through 2009 14 or 15. What happened there that was caused by housing and therefore you see the greatest difference. But even then I think you’ll be surprised to see that in the worst housing market of all time the average home depreciated nineteen point seven percent. And what was hard about that is that people had little equity because they were cash out refinancing and because as rates lowered they kept using it as like an A.T.M.. So housing housing definitely went down but most people think it went down like 50 percent and in fact it only went down about 19 percent in general. So what we see is that there’s there’s five years three positive ones to negative. And what they’re anticipating is that this next one is going to be more like one of those positives because we have so much demand so much growth. And let me speak specifically here about Utah that you know they’re expecting our state to double in size in fact double in size. Let me say in the next 20 years. So currently we have 600000 people in Utah County. That means we’ll have one point two million in Utah County in 20 years. So that’s a lot of people moving into this area every year. In fact you have to build about forty five home forty five hundred four thousand five hundred homes a year just to keep up with that kind of growth. And because of like the airport the airport in their construction they’re taking all the labor force which has put an even greater shortage of labor in the housing market to build houses. And that’s one of the reasons we’ve seen double digit appreciation just because of that strong demand. So our local markets been good. We we don’t see those forces changing. And let me let me say what forces really drive housing. It’s not really the politics although that’s going to be what drives what we call consumer confidence the politics and what’s talked about will scare people. And that could affect the market in a way that is just the psychology of people you know they’re they’re scared. Secondly jobs. So if we we see a tremendous shortage of jobs in this area you know because recession means you lose your job you lose your income you can’t pay for your house you can’t pay for anything. So if we lose a lot of jobs were we could see a slowdown in the market. And you know retirement you know people’s 401 K and stuff people associate with a loss of income in a recession their valuables decreased their their net worth decreases. But right now jobs are at an all time low housing with the recent decreases in interest rates. Got like fuel on the fire over these last few months and you know the your 401 K may go down because that would be the stock market but the real estate side of it. We anticipate that we will see a slow down in terms of the total number of housing sold but we don’t think it will slow down to the point that we’ll go negative. OK. Well this is my housing update where we talked about recession politics and the housing market I hope has been helpful please Like or comment or dislike this video. If you disagree but let’s get engaged. Let me hear from you and your thoughts and your feelings about the market and make sure you subscribe so that we can keep sharing great content with you. Hey Is David here. Thank you again for watching this video. I really appreciate you supporting the content and your involvement please share it with your family and friends so we can keep giving you good stuff. And of course as always we are real estate brokers here in the state of Utah. We would love to help you. And we have a huge network outside if you need help there to to find you the best realtor but give us a call or direct message just below. Thanks.

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