Yield curve inverted into recession

3 Replies

Hi, so recently there was a 10-2 yield curve inversion signaling a recession in 12-18 months time frame. My question is if a recession is coming that means to central banks will cut rates and therefore mortgages would be lower. Is it safer to wait two years for the recession and therefore houses to fall in price or is that blown out of proportion and the current state of real estate is still going strong? I did hear that population in Us is starting to go down so in future there may be less people to sell houses to as millennials are now a days not looking to start families. Any input would be nice

@Wei Li

Traditionally the answer to this question on these forums is:

Waiting to invest until the market crashes does not help your creditability with banks in the future. This if you waited and do not have any experience houses will be cheaper but loans will be much harder to get.

It’s ultimately your choice. If you have a ton of surplus money you can invest some now for experience and wait to invest the rest until the cap rates rise again.

Yield curve needs to be inverted for roughly 90 days to mean anything. It was inverted for less than a day. While all recent recessions have been preceeded by a 90 day inversion, not all inversions are followed by recessions.

Yield curve inverted back in December 2018 as well. Election year is coming up and historically the market does not drop during election years even with yield curve inversions before hand. Over the past 60 years, whenever a yield curve inverts it takes about 18 months or so for a housing market recession. I never heard of the 90 days yield curve inversion but that is good to know, will research further. I believe the market will drop right after the election, early 2021.