Page 21 - Venture - State of the Market 2020

HOUSES HAVE HIGH-INCOME ELASTICITY OF DEMAND. IN THE CASE OF A RECESSION,
WOULD YOU SUGGEST HOLDING ONTO A HOUSE THROUGH THE RECESSION AND
FOR MANY YEARS AFTER TO MAXIMIZE THE RETURN, OR SELL IT OFF EARLY ON BE-
FORE THE RECESSION BEGINS?

I suggest not to sell your house since it is a long-term investment. When selling houses, it may take a
long time and you will also incur transaction fees. Firesales in bad economics time are not worthy.
I suggest holding onto it. If there is a recession now, the economy would bound back.

Personally, I would not suggest selling when the market does not perform well. You get a lower price
for the property. The economy would go back.

It depends on how bad the recession is. If it is a financial crisis, I would suggest selling it off. Housing
properties are very risky and their values could go down very fast in a financial crisis.
If it is a small recession, you should just hold onto your housing properties.

It depends on the purpose of the house. if it’s residential then I would personally stick through it. How-
ever, if the purpose of the property is to earn income then I would advise selling it off. Most importantly,
since its a depreciation (long term), then I would stick through it until the early periods and then sell
until as a gain.

No wouldn’t worry about housing bubble for the next recession, specific industry but Seattle would be
overall fine because the top industry is technology.

WHAT ARE THE PRIMARY DIFFERENCES BETWEEN THE CHARACTERISTICS OF THE 2008
RECESSION AND THE POTENTIAL UPCOMING ONE? SHOULD WE WORRY ABOUT AN-
OTHER HOUSING BUBBLE? IS THE INCREASED RELIABILITY OF BANKS GOING TO RE-
SULT IN SMALLER LOSSES EXPERIENCED BY HOMEOWNERS-TO-BE?

This one is different from the 2008 financial crisis (Real Estate focused). It is more of a supply pushed
recession because of lower inputs and result in an increased price and demand. Most would say it
has already started and so far it’s going pretty well but things could change if we hit the low points as
in 2008 and the housing market may not be affected. It would have small corrections in the inflated
growth.

In my opinion, they should be rather similar. Insteading of a residential housing bubble like the one in
2008, this recession has more to do with the commercial real estate bubble. Even though the stan-
dards for residential mortgage are higher, the standards for commercial mortgage remain low. Proba-
bly yes, smaller losses could be experienced by homeowners-to-be due to the increased reliability of
banks.

Back in 2008, mortgage-backed housing properties and a lot of debts like personal and car loans
were not secured. The potential upcoming one should be way smaller than before since the standard
for mortgages is higher now. We do not need to worry about the housing bubble. And I believe that
homeowners-to-be should have smaller losses.

In 2008, there was the housing market boom. In 2020, we should not worry about the housing
bubble. It’s nationwide good so far. However, in places like Seattle and San Francisco where housing
prices are high, we may need to worry about the housing bubble. The homeowners-to-be should
have lower losses.

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