Potential Recession Risks Rise in Housing

Good morning, Dwellers! Welcome to another edition of Dwellings Digest, a realtor and investor driven newsletter simplifying real estate, exploring the economy-stock-real estate link, adding a fun twist with niche topics and more. Enjoy!

In today’s edition - Treasury Secretary Scott Bessent warns a U.S. recession “can’t be ruled out” amid tariff tensions and market volatility. Despite economic uncertainty, Midwest home prices jumped 20%, led by Milwaukee, while Florida’s inventory surge signals a buyer’s market. “Strategic pricing and move-in-ready homes are key in today’s shifting market,” said Redfin’s Chief Economist. Homeowners remain stable, but renters face growing risks as economic headwinds build. Stay informed with expert housing market insights and updates on national real estate trends.

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🏛️ Economic & Market Sentiment

Treasury Secretary Scott Bessent says he can't rule out the possibility of a recession

• No Recession Guarantee: Treasury Secretary Scott Bessent told NBC’s Meet the Press there are “no guarantees” against a recession, referencing unpredictable shocks like Covid-19.

• Market Volatility Is 'Healthy': Despite S&P 500 dropping over 10% and Nasdaq down 14% since Dec 2024, Bessent remains "not at all" worried, citing 35 years of investment experience.

• Confidence in Long-Term Growth: Bessent highlighted tax reform, deregulation, and energy security as key drivers for long-term market strength, despite short-term fluctuations due to Trump’s escalating tariff policies.

• Tariff Tensions Escalate: Trump has imposed 25% tariffs on Canada, Mexico, steel, and aluminum imports; threatened 200% tariffs on European wine and spirits; and issued two rounds of 10% tariffs on China since February 2025.

• Trump’s Mixed Signals on Recession: Earlier this month, Trump did not rule out a recession, calling it a “period of transition.” Later, he claimed, “I don’t see it at all. This country is going to boom.”

🎢 Impact on Real Estate

Midwest Home Prices Surge: Milwaukee Leads U.S. With 20% Increase Amid Inventory Shortages

• Milwaukee's Housing Market Sets Record: Home prices in Milwaukee soared 20% year-over-year in February 2025 to a median of $330,000, marking the highest growth among the 50 largest U.S. metros, according to Redfin.

• Demand Down, Prices Up: Despite a 6.2% drop in U.S. pending home sales, median home prices rose 3.2% nationwide to $425,421, driven by limited supply—particularly in the Midwest, where Detroit’s active listings fell 6.7%, the sharpest decline nationally.

• Midwest Remains Affordable: While prices rise, the region still offers value—Detroit’s median home price is $180,000, the lowest among major metros, with Cleveland at $217,750, making the Midwest the most affordable U.S. housing region.

Key National Metrics (Feb 2025):
• Pending sales: -6.2% YoY
• Active listings: +10.7% YoY
• Median days on market: 54 days (longest since Feb 2020)
• 30-year mortgage rate: 6.84%

Takeaway: The Midwest is heating up due to limited supply, while Texas & Florida cool down amid rising inventory and economic pressures. Strategic pricing and move-in readiness are critical for sellers in this evolving market.

🎙️ RE Spotlight

What Does a Potential Recession Mean for Housing?

• Recession Odds Surge to 40% in 2025: Economic uncertainty driven by volatile government policies has raised recession odds from 15% to 40%, with falling consumer confidence and stock market volatility signaling a potential downturn, though hard economic data remains resilient—for now.

• Homeowners Are Insulated: With record home equity and ultra-low mortgage rates locked in, homeowners are unlikely to face forced sales—even in a recession. Mortgage delinquencies may rise slightly, but forbearance and loan modifications will likely prevent widespread foreclosures.

• Renters at Higher Risk: Renters, often lower-income earners, are more susceptible to job losses, and a weakening labor market could push rental demand and rents downward. The threat of stagflation looms, possibly keeping mortgage rates elevated as the Fed prioritizes inflation control over job support.

Typical U.S. Homeowner Stays Put For 11.8 Years. In Parts of California, It’s Closer to 20 Years

• Record-High Tenure in Los Angeles: As of 2024, Los Angeles homeowners have a median tenure of 19.4 years, the longest among U.S. metros and the highest on record for the area.

• National Trends: Across the United States, the typical homeowner remains in their residence for 11.8 years, a significant increase from the 6.5-year median in 2005.

• Impact of Proposition 13: California's Proposition 13, enacted in 1978, caps property tax rates at 1% of a home's assessed value and limits annual assessment increases to 2%. This incentivizes homeowners to stay put longer to maintain lower property taxes.

Los Angeles Homeowners Lead Nation with Record 19.4-Year Tenure Amid Proposition 13's Influence

🏰 RE State Zone

Record Number of Homes Pile Up in Florida—Making 2 Major Cities Hot Markets for Buyers

• Florida Inventory Soars 40% YoY: In February 2025, Florida recorded 168,717 homes for sale, the highest ever, up nearly 40% year-over-year, with Orlando (+43.8%), Cape Coral (+42.7%), and Miami (+39.2%) leading the surge.

• Bradenton Home Prices Drop $117K: Median home prices in Bradenton fell from $549,000 in June 2022 to $432,000 in January 2025, while listings rose to 1,900 homes and homes lingered 67 days on market, creating prime buying opportunities.

• Sarasota’s Condo Prices Fall 17.4%: Sarasota’s median condo prices declined to $347,000, inventory grew to 2,463 listings, and median list prices dropped $150,000 from peak, signaling a strong shift to a buyer-friendly market.

🏕️ Niche-RE

Bought 8 Abandoned Apartments for $50,000—Now Making $220,000 a Year on Short-Term Rentals

• Historic Restoration with Impact: Sara McDaniel invested $780,000—including $730,000 in renovations—into restoring eight 1931 Spanish-style villas in Minden, LA, generating $220,000 in revenue in 2024 while revitalizing a blighted neighborhood once plagued by crime and abandonment.

• Addressing Housing Shortages: Managing 27 rental units—11 short-term and 16 long-term or investment properties—McDaniel maintains a long waitlist for housing, underscoring a critical gap in affordable rentals in northwest Louisiana.

• Community-Centric Investing: McDaniel leverages 0% interest loans and personal equity to create affordable housing and is launching Phillip’s Cottage, a transitional home for women and children exiting recovery, scheduled to open August 2025.

Buying property remotely: Growing interest in Israeli real estate among North American Jews

• Major Expo Tour Hits 4 Cities: 50 top reps from Israel’s leading real estate firms (Azorim, Acro, Tidhar, Rothstein) will visit Toronto, Lakewood, Teaneck, and Long Island for the Israel Real Estate Expo, amid record diaspora demand.

• Real Estate Expo Events Surge from 2 to 20 Annually: Demand for Israeli property abroad has skyrocketed, with expo events jumping from 2 in 2019 to 18 in 2024, and 15–20 planned for 2025, reflecting strong interest in investment, Aliyah, and vacation homes.

• Jerusalem, Tel Aviv, Ra’anana Lead, Carmei Gat Emerges: Top buying destinations include Jerusalem, Tel Aviv, Beit Shemesh, Netanya, and Ra’anana, with Carmei Gat gaining popularity among young Orthodox families due to emerging communities.

• 90% of Diaspora Buyers Prefer New Apartments: Over 90% of purchases are for newly built units, often in pre-sale stages, with flexible 10-90 and 20-80 payment plans, tailored to foreign buyers looking ahead to Aliyah in 2–3 years.
  

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OWNER FINANCNING AVAILABLE 2 Properties for the Price of One

And…that's a wrap on this edition!

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