Unemployment & housing prices. Where do we go from here?

Lets keep up with the reoccurring theme in my prior posts, unemployment. How does it correlate to housing prices across the US? Housing prices are now down throughout the US roughly 5% from its peak in Q4 2022. Some markets are still up, others down near 10%. But how does the risk of potential spike in unemployment affect housing prices? Surprisingly less than one would think. From a high level view, real estate prices actually consistently go up, regardless of the unemployment rate. Even comparing to the black swan of 08’ recession. Median prices were down ~20% from peak, and peak was when unemployment was at it’s lowest in 7 years. Which is the same that happened during this cycle, end of 2022. Lowest unemployment = peak prices.   

Now lets look at all other recessions since 1980 excluding 2008. On average prices fell 4-7% from peak to trough during the recessionary period. Which the past 3 months we already ticked up 1.4% from it’s peak 6.3% low. So where to we go from here?

Will real estate go up, down, or trade flat over the next year?

What will the result of fed cutting rates have on this projection?

Remember, CPI peaks, then unemployment. We are currently in limbo, right now we are trying to find the bottom, not testing peaks.

Stay level headed.

Next week, Wages & housing prices