Moving into part three of our four part series, the next question that we need to ask is: Are we headed towards another recession, and what does that mean?
When we talk about where we are today, the reality is that we can feel the slowdown occurring across the county, and it will continue to have an impact on economic activity. When addressing this question/concern, we have to ask ourselves what a recession truly is. A recession is a slowdown in economic activity. Now when we hear the word “recession” we immediately have these ideas and thoughts of what the prior recession was. If we talk about an economic slowdown, it’s very different, and keeping that in mind as we continue to talk about it is critically important in these times. To help discuss this, we’ll turn to the experts. Bill McBride from Calculated Risk had this to say:
“With this sudden economic stop, and with many states shutting down by closing down schools, bars restaurants etc. my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2 (as Goldman Sachs is forecasting). The length of the recession will depend on the course of the pandemic.”
Now certainly we can say that we are feeling this slowdown, and it can be said that we will continue to feel this throughout the course of the pandemic. If we look at where we were in 2008 compared to today, 2008 was like a tornado that had ripped through our town and tore things that had to be slowly rebuilt over time, and what we are experiencing today is a heavy snowstorm that is shutting things down. What we do know is that as time moves on, we will start to see things open back up again. We will be able to go to bars, restaurants and sporting events with the only challenge being getting into these places as everyone is going to be out and about.
Looking at that graphically speaking, the figure above provided by Goldman Sachs begins to show a “V” of recovery, and not a “U” like we saw in 2008, being a sharp decline followed by a sharp increase displaying further strong gains as we head into 2021. When looking at what the experts have to say, Wells Fargo agrees as well, saying “We do not expect a repeat of the severe recession of 2008-2009, because the virus and oil shocks are not endemic to the financial system, but are, rather, external. Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”
Referring back to the analogy previously used, we will not have to rebuild our financial system like in 2008. Once the snow melts from this current storm, things will kick in, and that’s why we see that “V” curve instead of the “U” curve.
So rather than use the actual word “recession” we should look to use the definition, being an “economic slowdown” and if that does happen, we need to look at our history of events that have shown similarities to what is occurring, and what we can expect to see moving forward. The visual provided below shows what has occurred with changes in home price over the last 5 recessions.
What we can see from this graphic is that in three of the last five recessions, home prices actually increased as a result. We did see a slight decrease in 1991, but what we all really remember is the significant decrease shown in 2008.
The message that needs to be taken from this is that recession does not equal a housing crisis.
Saving for a house might seem difficult, especially as the economy continues to fluctuate. However, that doesn’t mean you have to give up on your home buying dreams! If you want to take your first steps towards homeownership, we have a few simple tricks that can help you build your savings account.
How to Save Up for Your Perfect Place
Before you begin saving, consider how much you’d ideally like to put down on a house. Your down payment will likely be your largest upfront cost, and most buyers put down around 20% of a home’s value. However, there are some loans that require as little as 0% down, so be sure to explore all of your options.
It can take years to save up for a home. Nevertheless, if you plan ahead and follow these tips, you’ll soon be on a path to success.
Create a monthly budget…and stick to it
Having a budget can help you set spending limitations and savings goals each month, but it’s crucial to stick to it if you want to make progress. Start by documenting all your sources of income, then subtract your monthly expenses. This shows you what you’re paying for housing, food, utilities, and extra expenses, as well as how much you have left over. From there, you can set spending goals and designate a certain amount of money towards your house fund every month.
Cut unnecessary spending
As you craft a new budget, consider cutting out any expenses you can live without. You might have to make some sacrifices, but if you’re serious about saving for a home, your hard work will pay off in the long run. The more you save, the more house you can afford!
Consider getting rid of any unnecessary recurring payments, like streaming services or magazine subscriptions. Cooking at home, buying generic brands, and putting off that big vacation can also save you thousands every year. If you put that money directly into your savings, you won’t even miss it…because you were already spending it.
Pay off your debt
If you’re like many would-be homebuyers, lingering credit card or student loan debt might be keeping you from making a move. Before you start saving for a home, try to pay off debts or reconsolidate them into a smaller monthly payment with a lower interest rate.
Not sure where to start? Consider talking with a financial advisor about any underlying debt that needs to be paid off. It might take a while, but it’s better to take on a mortgage with more manageable payments.
Put your retirement savings on hold
While it is crucial to save for retirement, buying a home is also an important step in your life—so it’s okay to temporarily divert some of your savings towards your down payment. However, it’s not a good idea to take money out of your existing retirement accounts. You could get saddled with taxes and unwanted early withdrawal fees if you dip into your IRA or 401(k)!
Start a side hustle
Even during these challenging economic times, it’s still possible to make a quick buck doing what you love. Starting a side hustle can help you rake in some extra cash on the weekends and evenings—and even a little money can add up over time.
Looking for suggestions? Pet sitting, ride sharing, personal training, and photography are just a few possibilities. Who knows…your passion could turn into a profitable second income!
Ready to Start Your Buying Journey?
Looking for more home buying advice? We’ve got you covered! Just reach out to us for more tips and tricks, and let us know when you’re ready to take your next steps. We’re always here to answer any questions you might have, especially as the market continues to change.
Imagine the memories you’ll make by getting your lake life started! If you are seeking a waterfront home that has it all, then this is it! Great water frontage and lake views, dock with boat and wave runner lifts, gorgeous landscaping, expansive deck, koi pond, and over sized windows are just a few features of this spectacular property. Relaxing on the deck or dock, fishing, kayaking, boating, or just taking in the views can be yours! Inside, you’ll love the generous sized rooms, open floor plan, loft with fireplace, conversation pit with fireplace, and theater room that will make entertaining a breeze. The impressive, massive master suite also boasts an attached office/sitting room/craft room, luxurious master bath and two generous walk in closets with amazing built ins. Enjoy cooking in the kitchen with Corian countertops perfectly situated in the center of the home. Begin making those memories now! For more information on 118 Confederate Circle, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Welcome to 412 Birdie Road where you can enjoy relaxing on your front porch, covered deck which backs to the golf course or spending time in your yard. You will be delighted with the open floor plan and split bedroom design. The kitchen is spacious with plenty of counter and cabinet space. The living room is light filled with a gas fireplace to keep you cozy on the cool nights. You will love the master suite being spacious with the walk in closet and the master bath with double vanity and soaking tub. That’s not all… lower level is unfinished, already framed and ready for you to put your final touches. You already have the pool table that conveys to get started. For more information on 412 Birdie Road, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
You will be in awe of this beautiful home on 107 Chesterfield! Pride of ownership shows through and through. All through this home there are updates and fine touches. The kitchen has granite counter tops, upgraded stainless steel appliances and plenty of counter and cabinet space. Enjoy holiday and family meals in the formal dining room with access to the deck and beautiful views of the backyard and golf course. A living room that delights with a floor to ceiling brick fireplace perfect for those cool nights and is full of natural light. The master suite is spacious with access to the deck and a completely updated master bathroom with new vanity and tiled shower. Two more bedrooms and a beautifully updated hall bath finish the main level. That’s not all…. the lower level is fully finished with an amazing family room with a floor to ceiling brick fireplace, a bedroom and the third full bath. Plus an extra large utility room with laundry room and extra storage. Relax with your favorite beverage, listen to the birds sing, enjoy the beautiful tree lined yard with views of the golf course from your deck. For more information on 107 Chesterfield Court, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
You will be thrilled with the water views, brick architecture, and detail of the wrap around porch that welcomes you to 103 Riverdale Lane! This beautiful home is located near the front gate and steps away from the marina. The openness of the floor plan with tall ceilings, skylights and gorgeous flooring will wow you. The kitchen is delightful with upgraded stainless steel appliances and open to the living room to make spending time with family or entertaining a breeze. The master suite is complete with en suite bath and walk in closet. Enjoy relaxing on the screened porch after a long day with your favorite beverage. In addition the flat yard that would be perfect for flower gardens and evenings around the fire pit! For more information on 103 Riverdale Lane, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
As we continue to look for answers to some of the biggest
questions surrounding this crisis, we start to wonder what kind of effect the
stock market has on the housing market, and how much of an impact we will see
as a result. We begin by asking ourselves; When the stock market goes down as
quickly has it has been, does it have a tremendous effect on home prices?
Often the best answers to questions is another question itself, and in this case, we look to the last crisis that occurred; being the crash of 2008. So, we ask, will this be just like 2008?
To help answer this, we take a look at the graph provided above which shows the crash of 2008, to the S&P Correction of the same time. The graph illustrates the S&P Correction at 51% during that time, and the Annual Home Price Deprecation that occurred just under 20%.
In a quote by David Rosenberg, he explains that what we are experiencing now has more in common with what we experienced in 2001 (9/11) than with 2008.
“What 9/11 has in common with what is happening today is
that this shock has also generated fear, angst, and anxiety among the general
public. People avoided crowds then as they believed another terrorist attack
was coming and are acting the same today to avoid getting sick. The same parts
of the economy are under pressure – airlines, leisure, hospitality,
restaurants, entertainment – consumer discretionary services in general.” –
David Rosenberg, Gluskin Sheff + Associates Inc.’s Chief Economist.
When breaking down what was said by Mr. Rosenberg, we can see that this event lines up more with how we acted when 9/11 occurred. To help better illustrate this comparison, we will look at the graph below similarly as we did for 2008, but instead observe what occurred with 9/11 as well as the Dot.com crash.
Here we can see that the S&P Correction was at 45%,
however cumulatively over the same time, Housing Price Appreciation was
up almost 24%. This shows that housing reacted very differently during 9/11 and
the Dot.com crash compared to how it reacted in 2008. This visual helps make
the case that it’s not unreasonable to say that if what we’re experiencing
right now is a lot more like 9/11 and not 2008, than the housing market will react a lot more
like it did during 9/11 and the Dot.com crash than it did in 2008. Annual Home
Price Appreciation reacted very well, and based of off what’s occurred so far,
we can make the argument that we are seeing similar situations now.
When the pandemic began, the housing market was off to a tremendous start, with home sale reports showing the highest number of houses sold within the last 13 years, on an annual basis. While a bit of a slowdown has occurred due to the events going on, we can say that when this is all over, and it will be, we can expect the market to come roaring back and continue that trend that started the year off.
In these recent times of uncertainty, you may find yourself asking
how the Novel Coronavirus has impacted the housing market, and what changes you
can expect to see. We are here to give you some insight by answering four of the
biggest questions in this four-part blog involving what has happened to the
housing market, and what we can expect to see in the months and years to come.
Now more than ever it’s important to stay informed on what’s occuring in the
county, and we hope this series will provide you with the necessary information
that you need.
The first biggest question you may be asking yourself, is
what are people doing with their money, and what does it mean for housing?
To start off, it’s important to look at the relationship between the 30-year mortgage rate and 10-year treasury rate. For almost 50 years, the two rates have moved in unison with one another, with the 10-year treasury rate often being used to predict the foreseen mortgage rate.
As seen in the graph above, the two have held a symbiotic relationship of the past several decades. What you may now notice, is that this relationship has recently changed. This change can be attributed to several other factors such as money coming out of the stock market and into bonds. While treasury rates have seen a recent decline, mortgage rates have not followed in the same trend. In fact, what we are seeing right now is volatility in the market as pricing is going back and forth intraday.
In a quote from First American, “As evidenced by recent events, often the spread increases because mortgage refinance application processing capacity cannot meet demand, so lender-offered rates don’t follow the Treasury yield down one for one. So, while the mortgage rate has declined in response to the decline in yields, it is unlikely to fall by the same magnitude as the Treasury yield…
It is plausible that mortgage rates fall further if the
benchmark 10-year Treasury bonds yield decline further…
It’s reasonable to expect that rates will fall even further
and likely surpass the prior record low, but not necessarily one-for-one with
the 10-year Treasury yield.” – Odeta Kushi, Deputy Chief Economist, First
American.
In the graph below, we can look at the rate environment over the last year to better illustrate the flow of the 30-year mortgage rate going forward.
With all the volatility we’re seeing in the market right now being different than we’ve ever seen, we should look to the 10-year treasury as a way to judge what to expect in the future.
The stone accents and private lot welcome you to 512 Monticello Circle! Once inside you are wowed by the gleaming hardwood floors and the openness of this amazing home. Perfect for entertaining with the open flow from the upgraded spectacular kitchen with corian counter tops, large island and stainless steel appliances to the family room with vaulted ceilings, floor to ceiling stone fireplace for those cool nights, to the screened porch and wraparound deck. The master suite is spacious and you will be delighted with the master bath, luxurious spa retreat to melt away the stresses of the day. Finish off the main level with 2 more bedrooms and another full bath. Wait…… there’s more the loft upstairs is open to the family room, has a fourth bedroom, another full bath and flex space that could be an office or a play room or whatever you create. A beautiful home that shows pride of ownership throughout! For more information on 512 Monticello Circle, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Welcome to the waterfront lifestyle that 220 Mt. Pleasant delivers. If expansive views and deep water are what you crave, then you will fall in love! Relax and soak in the sun or entertain on your own deck or dock! Bring your boat and all your water toys! The home, located near the front gate, boasts amazing square footage, an open floor plan, a great room with floor to ceiling brick fireplace, gorgeous large windows that boast captivating views of the lake in all seasons! The master suite, which provides deck access along with the great room, is complimented by an attached master bath and walk in closet! The main level also offers 2 additional bedrooms and another full bath. The lower level consists of a huge family room with a wood stove, built in cabinets, and another bedroom and full bath. That’s not all…there is another flex room ideal for overflow guests that can be converted to a bedroom with ease!! Combine all of these features with plenty of storage space and a two car garage, and you’ve found your perfect place at the lake! Just imagine the memories you will make at this awesome waterfront home! For more information on 220 Mt Pleasant Drive, Click Here!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
