Talk of recession is just talk

  • Saturday, August 31, 2019 1:30am
  • Opinion

I talk real estate every day and recently I’ve been hearing people speak of a recession.

The way I understand a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending. People who think we are in a recession have a case of Flash in the Pan thinking.

That term has a literal meaning, i.e. a real flash in a real pan. Muskets used to have small pans to hold the gunpowder charge. An attempt to fire the musket in which the gunpowder flared up without firing a bullet would be called a “Flash in the Pan”. I’ve been hearing all this flared up talk about a recession, and I cannot see it. The numbers don’t support it.

Last month the median prices in our neighborhoods for homes and condos increased 8.27 percent year over year. The median sales price last year was $381,700 compared with $415,000. Pending sales jumped from 265 to 335 this year – that’s a whopping 26.42 percent.

That tells me that home buyers are confident in today’s market place. Their confidence can easily be attributed to fixed interest rates hovering below 4 percent for home mortgages and a decent inventory of homes available.

The July 2019 Consumer Confidence Survey® states that the percentage of consumers expecting business conditions will be better six months from now increased from 19.1 percent to 24 percent, while those expecting it will worsen declined from 12.6 percent to 8.7 percent. The Conference Board is a member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, it is a non-partisan, not-for-profit entity.

Home prices will continue to rise in our area. The Northwest Multiple Listing Service tells us that we have 1.55 months of inventory in north Snohomish County. That creates an unbalanced market that favors the seller. According to the Nation Association of Realtors, a balanced market will have between four and six months of available housing. Although 1.55 months seems small, compared with last year buyers have more homes to choose from. However, some home sellers think we are in a market that they can toss out any price and get an offer. That type of thinking and real estate brokers willing to play along has had a direct effect for homes staying on the market longer than they should.

Meanwhile, the number of pending sales in the Snohomish, King, Pierce and Kitsap counties region reached 7,773 last month, the fifth-highest number since 2001.

So, talk about recession in real estate is just that – talk. There’s no bullet coming out from that musket of conversation.

Todd Fahlman is a Marysville real estate agent whose column runs monthly.

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