A recession may hit some U.S. metros worse than others suggests Redfin’s research analyzing the top 50 metro housing markets across a range of metrics, including price to income, loan to value, exports share of local output, and employment diversity, and then ranked them from highest to lowest risk in the event of a recession. D.C. Metro area is among the favorable markets in terms of its relative risk of a housing downturn in the next recession, according to Redfin research published on Sept 6, 2019. D.C. ranks 24th out of 50 metro areas, with above median overall score.
Redfin economists crunched a range of risk factors to estimate which markets were most vulnerable in a severe economic downturn. They concluded that it’s unlikely that housing will cause the next downturn.
“If the U.S. enters a recession in the next two years, it will likely be caused by the global trade war,” Redfin Chief Economist Daryl Fairweather said. “U.S. industries that rely on exports, like the automotive industry and the agricultural industry, would be the most vulnerable and susceptible to layoffs.”
“Home prices are high right now, but they’re high because there’s not enough supply to meet demand, which means there’s not a bubble at risk of bursting,” said Redfin chief economist Daryl Fairweather. “Most of today’s financed homeowners have excellent credit and a cushion of home equity, making them unlikely to default on their mortgage even if their weekly grocery bill grows or their stock portfolio shrinks in the next recession.” However, even though the housing won’t be the cause of the recession, some housing markets will be more vulnerable than others. The risk rankings are not meant to suggest that any particular housing market will necessarily decline, Redfin said, but the weakest could see slower growth.
Disclaimer: This story contains predictions and forecasts relating to home prices and other aspects of the housing market by several reputable sources. Those forward-looking views are the equivalent of an educated guess and should be treated as such. Rectrix Investments brings to the attention of its readers different viewpoints, but makes no claims or assertions about future housing conditions.
Sources:
https://www.reuters.com/article/us-usa-economy-housing-recession/a-recession-may-hit-some-u-s-metros-worse-than-others-idUSKCN1VR2D4
https://www.cnbc.com/2019/09/06/reuters-america-a-recession-may-hit-some-u-s-metros-worse-than-others.html
https://www.redfin.com/blog/next-recession-housing-market
https://www.redfin.com/blog/how-recession-proof-is-your-home/
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