It’s mostly a given the economy will take a sizable hit in Q2. For the slump to be classified as a recession, we’ll need two consecutive quarters of negative GDP growth. With sensible policy I am not sure the economy will be that bad in Q3. Anyway, I think it’s instructive to look back at how the Bay Area housing market did during the dot-com bust. I found this old Zillow article:
- Between May 2001 and January 2002 – the dot-com bust – the median home value nationwide increased by 3.3 percent.
- Over the same period, home values fell by 7.5 percent in San Jose and 0.7 percent in San Francisco, two tech hot spots.
- In the Bay Area, lower-valued homes experienced a less-severe drop in value and a faster recovery during the dot-com bust and recovery than mid-level and top-tier homes.
For what is worth I don’t think the corona virus is nearly as bad as the dot-com bust. Dot-com was like a nuclear bomb targeted at tech. Many tech companies went belly up. But who knows? On the other hand interests rate literally has never been lower…