A Recession Doesn’t Equal a Housing Crisis

Eileen Kedersha
A Recession Doesn’t Equal a Housing Crisis Simplifying The Market

Everywhere you look, people are talking about a potential recession. And if you’re planning to buy or sell a house, this may leave you wondering if your plans are still a wise move. To help ease your mind, experts are saying that if we do officially enter a recession, it’ll be mild and short. As the Federal Reserve explained in their March meeting:

“. . . the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.” 

While a recession may be on the horizon, it won’t be one for the housing market record books like the crash in 2008. What we have to remember is that a recession doesn’t always lead to a housing crisis.

To prove it, let’s look at the historical data of what happened in real estate during previous recessions. That way you know why you shouldn’t be afraid of what a recession could mean for the housing market today.  

A Recession Doesn’t Mean Falling Home Prices 

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession will be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. Back then, one of the big reasons why prices fell was because there was a surplus of homes for sale at the same time distressed properties flooded the market. Today, the number of homes for sale is low, so while home prices may see slight declines in some areas and slight gains in others, a crash simply isn’t in the cards. 

A Recession Means Falling Mortgage Rates

What a recession really means for the housing market is falling mortgage rates. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.

Bankrate explains mortgage rates typically fall during an economic slowdown:

“During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers.” 

This year, mortgage rates have been quite volatile as they’ve responded to high inflation. The 30-year fixed mortgage rate has hovered between roughly 6-7%, and that’s impacted affordability for many potential homebuyers. 

But, if there is a recession, history tells us mortgage rates may fall below that threshold, even though the days of 3% are behind us.

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You don’t need to fear what a recession means for the housing market. If we do have a recession, experts say it will be mild and short, and history shows it also means mortgage rates go down.

Ways To Overcome Affordability Challenges in Today’s Housing Market [INFOGRAPHIC]

Eileen Kedersha
Ways To Overcome Affordability Challenges in Today’s Housing Market [INFOGRAPHIC] Simplifying The Market

  • With so few homes on the market right now, widening the scope of your search to include nearby areas could help you find more options in your budget.
  • You can also work with a trusted lender to consider alternative financing options and search for down payment assistance.
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Growing Your Green Thumb and Monetizing a Small Farm

Emma Croft

Image via Pexels

Growing Your Green Thumb and Monetizing a Small Farm

Aurhor: Emma Croft emma.croft@getgardening.info 

Starting a small farm can provide you with financial security and satisfaction. If you’re looking to monetize your small farm, there are some important steps that need to be taken to ensure success. The Kedersha Group has compiled a list of tips and tricks on how to get started and monetize your small farm.

Write a Plan for Your LLC

Before diving into the process of starting a small farm, it’s essential to create a well-thought-out business plan. This plan should detail the goals, financial plans, resources, strategies, and any other relevant information related to your farm. Having a clear business plan will help guide you throughout the entire process of launching your small farm.

You will also need to choose your business structure. The most common type for small businesses is the limited liability company, or LLC. This designation is easy to set up and comes with tax advantages along with personal asset protection. You will need to complete five steps to set up an LLC in Florida, which you can do on your own or through a formation service.

Determining Which Crops or Goods Are In-Demand

Next, do research on what crops or goods are in-demand in your area. This can help you determine what products would be most successful for you to grow or produce. Consider factors like local climate and soil conditions when deciding which products would be best for your particular situation.

Creating a Budget

It’s essential to create an accurate budget that reflects the cost of starting up and running a successful operation. Factor in costs like land, materials needed for production, labor, marketing, legal fees, etc., so that you can accurately determine how much capital you need to start up and operate the business long-term. You should also set up a contingency reserve so that you have the funds to cover any unexpected expenses.

Creating Marketing Materials

It’s important to develop marketing materials that will promote your business’s brand and attract customers who are interested in purchasing your goods or services. Using PDF tools is an easy way to create professional-looking flyers, brochures, posters, and more that will showcase the uniqueness of your farm while also highlighting all of its offerings and selling points.

Taking Advantage of Government Grants and Tax Credits

The government offers various grants and tax credits specifically designed for agricultural businesses. These could potentially reduce costs associated with starting up or operating your own farming business significantly. It’s definitely worth researching further into this option before making any big decisions regarding start-up finances. Additionally, there are many other forms of funding available online through crowdfunding sites like Kickstarter or Patreon if traditional financing isn’t within reach right away.

Determining the Best Pricing Strategy

Deciding on how much to charge customers for goods produced by your own farming business is no easy decision. However, there are three pricing strategies used most often by farmers today: cost plus pricing (adding fixed percentage markup on product cost), competitive pricing (charging price similar to competitors), or value-based pricing (charging price based on the perceived value the customer places onto the product).

 

Ultimately, it’s up to you to decide which strategy works best for your farm, but considering all three options before setting prices might help lead you closer to finding the perfect pricing solution tailored specifically to your needs.

Try Your Hand at a Hobby Farm

Starting a small farm can be an exciting yet somewhat frightening experience if you don’t have an idea where to begin. The trick is to take it slow and steady. By creating a well-thought-out business plan and determining which crops are in-demand, creating a budget, protecting yourself with an LLC, taking advantage of government grants and tax credits, and then finally settling on the best pricing strategy tailored specifically to your needs, you will truly be ready to take your first steps towards realizing your dream of owning and monetizing your very own small farm.

If you’re looking for the right property to begin your small farm or enjoy the Florida Lifestyle, contact The Kedersha Group. feel free to contact Eileen Kedersha, a Broker Associate with ONE Sotheby’s International Realty, 954-462-3600 | https://www.sfloridaluxuryhomes.com/ | EKedersha@OneSothebysRealty.com or her Husband, William Kedersha who specializes in investment properties throughout Florida, 954-817-2900 Wkedersha@onesothebysrealty.com. We will help you to find the perfect location to start your new business!