How A Recession Affects Likely Real Estate Movers
This post was recently featured on Inman News.
A recession in the US is looming, but how will it affect lead gen with likely residential real estate movers and what has happened historically?
In the United States, a recession is typically defined as a significant decline in economic activity and is typically characterized by a contraction in gross domestic product (GDP), a rise in unemployment, and declining economic activity across multiple sectors of the economy.
The duration of a recession in the United States can vary widely depending on a variety of factors, “including the severity of the underlying economic shocks and the effectiveness of policy responses aimed at stabilizing the economy.” Historically, the duration of recessions in the US has ranged from a few months to several years. But according to data from the National Bureau of Economic Research (NBER) the average duration of a recession in the US since World War II has been around 11 months, with a range of 6 to 18 months.
Causation vs Correlation
There is a direct correlation between recessions and people moving. During recessions, people may move for a variety of reasons, such as job loss, financial hardship, or a need to downsize or cut expenses.
Historically, during a recession, job losses and economic insecurity can make it difficult for people to afford their homes, leading to foreclosures, evictions, and a rise in homelessness. This can result in higher rates of residential mobility as people search for more affordable housing options or move in with family and friends. However, in many markets through the US, a massive amount of wealth has been generated as home prices skyrocketed the past 2 years. So this factor may not be as significant this time.
Moreover, economic downturns can also lead to changes in migration patterns, with people moving away from areas that are hard hit by the recession in search of better economic opportunities elsewhere. For example, during the 2008-2009 recession, there was a significant outmigration from states that were hit hard by the housing market collapse, such as Florida, Arizona, and Nevada.
Overall, while there is a correlation between recessions and people moving, the relationship between the two is complex and not simple to predict as these are unprecedented times.
How will we know Recession is Official?
The National Bureau of Economic Research (NBER) is the organization responsible for officially dating business cycles and determining whether the US economy is in a recession. NBER typically considers a variety of economic indicators, including GDP, employment, industrial production, and income, among others, to determine the start and end dates of a recession. The organization takes into account both the depth and duration of the economic decline, as well as the impact on multiple sectors of the economy.
NBER does not use Residential Real Estate data to make the calculation. However, the real estate market can be an important factor in economic cycles, and shifts in the housing market can impact the broader economy. For example, during the 2008-2009 recession, the collapse of the housing market played a key role in triggering the broader economic downturn, as the decline in home values and increase in foreclosures led to a decline in consumer spending and a contraction in the financial sector.
Real Estate Movers and Shakers
Recession or not people will move. Frequent readers of this blog know that life events cause people to move – and now more than ever these life events are the sole reason people need to move. The Data D’s: Death, Divorce, Diapers, Diamonds, Diplomas (there’s more) – they alter life and force people to move….. despite high prices or bad interest rates. Knowing this can impact your lead gen. To learn more about how Revaluate AI scores what likely Real Estate Movers are in the prospects in your database – set a time to talk: http://revaluate.com/talk