Are we in a recession? (Data on eating out & new loans)

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Are we in a recession? (Data on eating out & new loans)

Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes

Many of you have been hearing me show my frustrations over the lack of deals since we are in a seller's market. I don't have the answers but I do ask the right questions... and that question is are we 'already in a recession'?

Recessions are loosely defined as two-quarters of stagnant GDP growth. I don't really know what goes into those numbers but I can tell you that the explosive rent growth in markets like Dallas are starting to stagnant (still increasing though).

http://www.zerohedge.com/news/2017-06-11/restaurant-sales-traffic-tumble-industry-hasnt-reported-positive-month-february-2016

[Americans are minimizing discretionary spending on Main Street]

http://www.zerohedge.com/news/2017-06-10/us-weeks-away-recession-according-latest-loan-data
[The real Americans are decreasing their home purchasing]

Thoughts?

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Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y

A recession is when your neighbor is out of work. A depression is when you are out of work.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    No not in my area. Incredible growth just huge. The traffic in GA is set to double and also adding 6 million people to the state over the next horizon.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    I don't think it is a recession more of a leveling off to normal growth versus hyper growth.

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  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    A recession is when your neighbor is out of work. A depression is when you are out of work.

    10Reply
  • Andy Rosenberger
    Collegeville, PA · Member since 2017 · 5 posts · 6 votes
    9y
    Stay away from zerohedge. They are smart guys and they have insights outside of the traditional mainstream. That said, if you invested like they write, you would be bankrupt 6 times by now. Everything they write is geared at what's wrong with the world.
    2Reply
  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    9y

    @Joel Owens

    I do not believe that we are in a recession yet. 

    I do believe that there are many places in the US where a person with the median income is struggling due to inflation and high housing costs. In some places a median income person can no longer afford to purchase a home and spends an increasing percentage of their income on rent.

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    1Reply
  • Malcolm Douglas
    Investor · Chicago, IL · Member since 2016 · 39 posts · 33 votes
    9y

    Agree with @Andy Rosenberger.  As someone who has read various finance/investing/market websites for many years, Zero Hedge consistently calls for doom and gloom.  Of course one day they'll be right, but if a RE investor listened to their advice over the past several years and sat on the sidelines they would have missed out on tremendous gains.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    9y

    I focus on upscale areas. Low to average income areas fall faster in a down turn. More affluent areas as long as they are not over leveraged tend to have considerable assets to last while the economy is cycling.

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  • Justin Merchant
    Real Estate Broker · Tampa, FL · Member since 2017 · 43 posts · 24 votes
    9y
    I don't think we're in a recession yet, but I think we're closer too it than we are far. We've been rocking for far too long to not expect a pullback sooner than later. It will be interesting to see what happens with the institutional grade investors if we do have a small pullback. Do they jump back in and start buying heavily again or do they stand pat with the assets they have?
    0Reply
  • Alexander Monnin
    OH · Member since 2017 · 45 posts · 38 votes
    9y

    In the last 50 years, the yield curve inverted before every recession.  This happened 7 out of 7 times.  

    The yield curve inverts approximately 12 months before the start of a recession (could be more, could be less).  It inverts when short term interest rates are higher than long term interest rates.  

    Currently, the yield curve is upward sloped, not inverted.  These are just observations I've made.  In my opinion we are not in a recession yet.

    4Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y

    I hope so, but I think not.

    1Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Personally I think we are near the top of a market and I don't believe this feels like a recession.

    0Reply
  • Brian Vaughan
    Real Estate Consultant · Texas Hill Country · Member since 2017 · 56 posts · 58 votes
    9y
    I am trying to figure out what you meant by your last sentence: "The Real Americans are decreasing their home purchasing".
    1Reply
  • Sean Cole
    Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
    9y

    A recession isn't defined as stagnant (no growth) - it's defined as a shrinking economy.  Rent prices in 1 market aren't an indicator of anything aside from rent prices in that market.

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    9y

    Deals being hard to find does not constitute a recession.

    We are, however, in a housing shortage due to the crash in 2007 / 2008. Some 80% of builders and developers went under and housing starts are just now beginning the process of ramping back up. Lots of catch-up to do yet.

    Supply and demand are supporting higher prices, but this is being held in check by the relative dearth of lending due to the post-crash "knee jerk" in the lending industry.

    1Reply
  • Lesley Resnick
    Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    It is a long game, however I think we are at an inflection point.  We could go higher or drop.  The likelihood of a huge increase or drop is unlikely.   A boom or crash is going to be determined by future circumstances.  If we go to 3-4% GDP as promiserd by Trump, we will go higher.  If we end up in another conflict i.e. Korea, then we are heading down.

    Most likely a soft landing, a slowing of growth and the cycle will reset. Rising interest rates, slow wage growth and inflation is more importnat to RE than any pundant on TV. There is no overall bubble, LTV are stabilized and qualification for loans is striker than it has been in a long time.

    0Reply
  • Jack B.
    Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    Real estate is driven by supply and demand. Limited supply and high demand is driving housing. While I don't think we are in a recession yet, I have noticed a lot of people having a much harder time finding comparable work than 2 years ago. We shouldn't hit an actual recession until 2018 or 2019. 

    The real estate market will suffer slightly during that time but it will go back up after that again, it will only be a glitch.

    0Reply
  • Marissa Carroll
    Shawnee Mission, KS · Member since 2016 · 62 posts · 25 votes
    9y

    Definitely not. Companies are hiring like crazy where I live. Also, in my field (construction industry), our work is some of the first to dry up at the beginning of a downturn and the last to come back after a recession. We can hardly keep up with the work coming our way. I've talked to a lot of people in my industry and we think there might be another two years or so. It feels like 05/06 to us.

    0Reply
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