Why the Economy is Unlikely to Cause a Housing Market Collapse

Concerns about a potential recession are widespread. In recent years, there’s been considerable discussion about the possibility of a recession, sparking fears that it could lead to a significant increase in unemployment. Some are even apprehensive that this could result in a foreclosure crisis reminiscent of the one experienced 15 years ago.

Yet, the most recent Economic Forecasting Survey by the Wall Street Journal (WSJ) indicates a shift in perspective. For the first time in over a year, less than half of the economists surveyed (48%) predict a recession in the coming year:

“Economists are turning optimistic on the U.S. economy . . . economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year.”

With a majority of experts no longer anticipating a recession in the near future, it’s logical to infer that they also don’t foresee a significant rise in unemployment. The following graph, derived from the same WSJ survey, illustrates the economists’ projections for the unemployment rate over the next three years (refer to graph below):

While these projections suggest some job losses in the coming year, which are undoubtedly challenging for those affected and their families, the key question is whether these losses will be substantial enough to trigger a surge in foreclosures and destabilize the housing market. Historical data from Macrotrends and the Bureau of Labor Statistics (BLS) suggest otherwise. Currently, the unemployment rate is near historic lows (see graph below):

The graph’s orange bar indicates that the average unemployment rate since 1948 is 5.7%. The red bar highlights that during the 2008 financial crisis, which led to a housing market crash, the average unemployment rate reached 8.3%. Both figures are significantly higher than today’s unemployment rate (depicted by the blue bar).

Future projections indicate that the unemployment rate will likely remain below the 75-year average, suggesting that a foreclosure crisis severe enough to impact the housing market significantly is unlikely.

Bottom Line

The majority of economists now believe that a recession is unlikely in the next 12 months. Consequently, they also don’t anticipate a sharp increase in unemployment leading to widespread foreclosures and another housing market downturn. For those with concerns about unemployment and its effect on the housing market, it’s a good time to seek further information and guidance from your local market experts at Countryside Homes NJ and RE/MAX Select.

Client Testimonials for Countryside Homes NJ

At Countryside Homes NJ and RE/MAX Select, we pride ourselves on delivering exceptional service to our clients. But don’t just take our word for it—read what our satisfied customers have to say. From first-time homebuyers to seasoned real estate investors and new home builders, our clients appreciate our dedication, expertise, and commitment to their success. Here are some of their stories.

David R. New Homeowner

Collaborating with Keith LaBrunda and Heather Montalbano from Countryside Homes NJ and RE/MAX Select streamlined the home-buying process for me. They were attentive to my needs and preferences, ensuring they understood exactly what I was seeking in a home and what was within my financial comfort zone. Keith and Heather provided invaluable assistance during the offer stage, sharing insightful details that enabled me to place a successful bid on my desired property. They recommended associates to assist me with securing a mortgage, conducting home inspections, and acquiring homeowner's insurance. Post-purchase, they continued to be a resource, suggesting local companies to contact for internet, water, waste management, oil, and other essential services. The experience of purchasing a home with Keith LaBrunda and Heather Montalbano was seamless and enjoyable.

Rachel and Andre First Time Homebuyer

As first-time homebuyers, the process of finding and purchasing a home felt daunting. But from the moment we reached out to Heather and Keith at Countryside Homes NJ and RE/MAX Select, our worries were put to rest. Their team was incredibly patient, answering all our questions and guiding us through every step. They took the time to understand our needs and preferences, ensuring that we found the perfect home in a neighborhood we love. We were especially impressed by their vast knowledge of the local market and their commitment to ensuring we got the best deal possible. We can't thank them enough for making our dream of homeownership a reality. If you're in the market for a new home, we highly recommend Heather and Keith at Countryside Homes NJ and RE/MAX Select. They truly go above and beyond for their clients!

Prestia Family New Homeowners

From the moment we began our home search, Heather at Countryside Homes NJ and RE/MAX Select stood out as the epitome of professionalism and dedication. Her team's in-depth knowledge of the Rockaway Borough area and their unwavering commitment to our needs made our home buying journey not only smooth but truly enjoyable. As new homeowners in Rockaway Borough, NJ, we can confidently say that choosing Heather at Countryside Homes NJ and RE/MAX Select was the best decision we made. Her expertise, patience, and genuine care for our family's needs transformed what could have been a stressful process into a memorable and joyous occasion. We are beyond grateful for her support and would highly recommend her and her team to anyone looking to find their dream home. Thank you for turning our dreams into reality!