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Another Recession Will Start Within Three Years, According to Experts

Geopolitical crisis is the most commonly expected cause among surveyed experts

Aug 16, 2017

SEATTLE, Aug. 16, 2017 /PRNewswire/ -- There is a 73 percent chance the next U.S. recession will begin by the end of 2020, according to a panel of experts surveyed for the 2017 Q3 Zillow Home Price Expectations Surveyi. But the experts don't anticipate the housing market would play as big a role as in past recessions. Instead, they anticipate a geopolitical crisis could trigger the next recession.

The quarterly survey, sponsored by Zillow® and conducted by Pulsenomics LLC, asked more than 100 real estate experts and economists about the next national recession, its causes, and the potential effects on the housing market.

The panelists expect a future recession to have a moderate impact on the U.S. housing market overall, but some markets are more at risk than others. More than 60 percent of experts say the next recession will have a major impact on the San Francisco and Miami housing markets, and at least half predict a major impact in Los Angeles and New York as well.

"That experts believe geopolitical crisis is the most likely next trigger for the next recession is a sign of the times we're living in," said Zillow Chief Economist Dr. Svenja Gudell. "Historically, geopolitical events rarely cause a sustained recession, and other contributing factors, such as oil price shocks, play a more predominant role. We've enjoyed eight years of sustained growth following the last recession, but the housing market is still recovering in many ways. The housing market is not expected to cause the next recession, but some major markets could see some collateral damage."

Unsustainable home price increases and lax lending standards led to a significant decline in the housing market 10 years ago, kicking off the last recession. Nationally, homes lost 23 percent of their value, and more than 50 percent in the hardest hit metros. This crash led to a widespread economic recession, with high unemployment rates and slow wage growth.

The Great Recession is still being felt after several years of recovery. Even as some housing markets set record highs, home values in 55 percent of U.S. markets are below the peak values set during the bubble years, and five million homeowners are still underwater on their mortgages. Wage increases have only recently picked up after several years of relatively stagnant growthii.

Despite the expected impact on the housing market, the survey respondents expect home values to continue to appreciate at a healthy pace. The current expectation is for home values to rise 5.1 percent in 2017, up from 4.4 percent earlier this year.

"Stronger short-term expectations for U.S. home prices are a sign of the persistent inventory challenges facing first-time and move-up homebuyers, but experts' long-term predictions suggest that buyers will have more bargaining power in the years ahead," said Pulsenomics Founder Terry Loebs. "Incomes growing faster than home values is a promising sign for renters hoping to become homeowners, but they should still tread carefully in markets that have seen sharp price increases in recent years."

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

About Pulsenomics:
Pulsenomics LLC ( is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC.

i This edition of the Zillow Home Price Expectations Survey surveyed 114 experts between July 24-August 7, 2017. The survey was conducted by Pulsenomics LLC on behalf of Zillow, Inc. and asked the experts about their expectations for the housing market. 



For further information: Lauren Braun, Zillow,