Experts Warn Next Recession Could Begin in 2020

Experts Warn Next Recession Could Begin in 2020

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Experts Warn Next Recession Could Begin in 2020

The United States set a record for the longest economic expansion this month, but it’s not expected to go on for much longer. Indeed, experts warn next recession could begin in 2020.

Few panelists expect a recession to start by the end of this year. Half of the experts surveyed said the next recession would start in 2020, with nearly one in five (19%) identifying the third quarter as the likely beginning. Another 35% of experts think the current expansion will end in 2021.

Experts Warn Next Recession Could Begin in 2020

The most likely cause for the next recession is trade policy, followed by a stock market correction and geopolitical crisis.

“Housing slowdowns have been a major component, if not catalyst, for economic recessions in the past, but that won’t be the case the next time around, primarily because housing will have worked out its kinks ahead of time,” said Skylar Olsen, Zillow director of economic research. “Housing markets across the country are already heading into a potential correction a solid year before the overall economy is expected to experience the same. The current housing slowdown is, in some ways, a return to balance that will help increase the resiliency of the housing market when the next recession does arrive.”

But even if a housing slowdown isn’t the cause of the recession, the housing market will likely feel the impact.

Still, a recession would not result in a sudden plunge in home values. Even in the Great Recession, when housing played a much larger role than is expected for the next recession, national home values fell on an annual basis for 54 months before reaching their lowest point in 2012, and never fell by more than 1% month over month.

Home value appreciation has slowed over the past several months, from 8.1% annual growth in December 2018 to 5.2% in June 2019 – the slowest annual pace since 2015. The expected decline in demand in 2020 is likely to extend the housing slowdown going forward.

“More than any other factor with the potential to impact home-buying demand through 2020, mortgage rates are viewed by our expert panel to be most significant. Although 30-year mortgages are near 18-month lows and available now at rates below 4%, most experts believe the recent rate move is a temporary dip, and that home-buying demand through next year will be dampened by other, more persistent factors that affect affordability, such as constrained inventory and the growth of house prices relative to wages.”

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