Forbes put out an article this week talking about a “richcession.” It caught my attention because I was having a conversation with a realtor – hi Scott! – last week and he said it’s only a recession in real estate. As in, we are the only ones feeling this.
Over the weekend, I turned this over in my head – I noticed restaurants are still packed, stores are still busy, everything seems to buzzing and no one seems to be pinching pennies.
Mind you, I realize there are definitely some tech folks feeling the recession in the form of layoffs. So maybe it’s just us and them. That’s what the Forbes article described - that this recession may actually be felt by the upper and middle classes most. The tight jobs market will protect everyone else. For example, the recent layoffs seem to be “white collar” while restaurants and the hospitality industry are both still begging for employees.
I’m also aware that the National Bureau of Economic Research has not officially called this recession. I’ve discussed this before though and I believe that when they do, it will be described as 2022 - xxxx. Meaning it started last year.
Where else are folks likely to feel this thing?
I did a little polling on my Instagram this week and received some really interesting responses about where people are feeling the effects of a recession already. I had several responses from friends who work as recruiters or head hunters. They said that many, many companies have hiring freezes in place. A couple responses stating raises are also on a freeze at their employers and no year end bonuses were given. This falls in line with the “richsession” concept that white collar workers will feel this recession first and foremost.
I also received responses about online commerce being way down, influencers being offered less brand partnerships and other indicators that consumers are slowing down on their shopping. Then, something I can unfortunately speak to personally, AirBnB bookings are sharply down. My husband and I actually have a property in Sonoma County that we list on AirBnB and it has only ONE booking this year. ONE. Many investors in this sphere are shifting their focus from short term rentals to mid-term – meaning 30 plus days and hoping for executive rentals or traveling nurses. It's a wise move and also one that puts less wear and tear on your property. Overall the vacation rental situation is definitely an interesting trend to follow and again makes a lot of sense. As a recession sets in, one of the first things people will cut back on is travel. Vacations get tabled and thus AirBnB rentals would be down.
I was also talking with my friend Kelli who is a financial advisor and she reminded me that there is almost always a disconnect between Wall Street and Main Street. It’s possible that Wall Street has already seen the worst of this recession – those of you watching the market might be relieved if that’s the case – and that it’s now starting to filter down to Main Street.
It will definitely be interesting to watch and it’s important to understand the impact this would have on housing. If you haven’t been following these updates, I would highly recommend checking out last week’s so you can understand and discuss the real estate market during this strange economic time.