The United States set a record for the longest economic expansion this month, and it is expected to go on even longer. But everything is cyclical, and the next recession will likely begin in 2020, according to a panel of housing experts and economists.
The Zillow Home Price Expectations Survey, sponsored by Zillow and conducted quarterly by Pulsenomics LLC, asks more than 100 real-estate economists and experts for their predictions about the U.S. housing market. The second-quarter survey also asked the panelists for their expectations about the next recession, and how home-buying demand will change through the end of next year.
Few panelists expect a recession to start by the end of this year. Half of the experts surveyed said the next recession will start in 2020, with nearly one in five (19 percent) identifying the third quarter as the likely beginning. Another 35 percent of experts think the current expansion will end in 2021.
The most likely cause for the next recession is trade policy, followed by a stock-market correction and geopolitical crisis. Only a few experts think that a housing slowdown will be a significant factor in causing the next recession, with 12 respondents naming it among the three most likely triggers.
“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.”
But even if a housing slowdown isn’t the cause of the recession, the housing market will likely feel the impact. Just over half of the panelists (51 percent) expect home-buying demand will be somewhat or significantly lower in 2020, while only 17 percent say it will increase. Homes will likely stay on the market longer and bidding wars will become less common.