When do you estimate the next recession???

[Mai Barnes]

Hi Newbie here!!! Question for all the Veterans: When do you estimate the next recession???

[Russell Gronsky]

@Mai Barnes, I know as a newbie, you want a straight answer on a question like this but the bottom line is: no one knows. Sure you can keep track of treasury note yields to give you indicators but that's really all they are, indicators. They may suggest that the environment is ripe for a recession but a recession needs a trigger to start it, so until that happens, there won't be a recession. And, even when it does start, it's not apparent right away. 

If you look at GDP from '07-'09, you'll see it start to fall and then then it comes back up for a while, then it starts to tumble. You see, no one knows if a reduction in price is just a correction or a recession so when prices dip 5, 10, 15%, money that was on the sidelines, jumps in thinking they are about to scoop up some investments at a discount. And who knows, maybe they are right. Because maybe the government will do something like...oh, I don't know....maybe take Fannie and Freddie out of conservatorship....that would probably re-energize the stock and RE market and all the money turnover that happens from it will push the economy even higher. OR, we could have a mild correction. OR, we could have a deep recession as I think we are coming due for one of those bad "every 75-years recessions" or something like that. 

The best precautions I think are to watch housing statistics in your local market (your agent can provide you that stuff from previous years) and pay attention to days on market and prices listed vs prices sold for houses in your target areas. Those will be your best indicators of where your local market is going but overall, in the end, no one really knows, BUT..... the risk of not investing is even bigger.