Top loan officer on why a recession might not be a bad thing

He cited the most recent statistics by the Bureau of Labor, which show that payroll employment increased by 428,000 in April, with widespread job growth, although productivity in Q1 fell by 7.5% and unit labor costs shot up by 11.6%.

“If you look at the most recent statistics, it looks like incomes are up 10% year over year, and then you’ve got a shortage of inventory. So even though rates and borrowing costs are going up, there’s still high demand and low inventory.”

However, although he did not expect to see double-digit home price appreciation, he said demand would still be strong because renting was not a cheaper option.

“People need a place to live, and their alternative solution is renting, but those prices are up just as much as home price appreciation, so homeownership seems to still be a better alternative versus renting,” he pointed out.

Real estate firm Redfin said average rents increased by 14% in 2021, and, according to a report by the Federal Reserve Bank of New York, they are expected to continue rising by about 10% this year.