A Recession Is Coming, But the Housing Market Won't Trigger It
A Tudor style home in the Lawrence Park Historic District of Bronxville, New York, US, on Saturday, April 1, 2023. House prices in the US have stabilized this year after dipping slightly in 2022.
Photographer: Joe Buglewicz/BloombergOne big reason to continue to believe this is no 2008-style financial crisis in the making is the housing market, which has held up well. That means, we’re more likely to experience a garden-variety recession, and I think it will happen sometime later this year.
Residential property was famously the trigger for a cataclysmic global financial crisis a decade and a half ago. That’s because residential property is one of the principal assets of the middle classes across the globe. And it’s a leveraged investment to boot because of the money borrowed through mortgages. That makes large and pervasive house-price declines toxic for the economy.