The Zonda / Metrostudy teams recently gazed into their crystal balls to provide financial analysis for the homebuilding industry, which includes bad news for the end of year 2021. “We’re predicting a fairly healthy year for the remainder of 2019 with about 2.575 million jobs being created this year,” said chief economist Mark Boud of Metrostudy. “This forecast was done before the recent news on tariffs so this may be revised downward. As time goes on we do predict a recession and predict job losses to begin at the latter part of 2021 and going into 2022.”
The good news is Boud and his team don’t believe the recession will be nearly as bad as what happened during the housing crises. The timing of the recession prediction is based on the 2-10 treasury yield spread, a key economic metric that measures the difference of yields on short term (2-year) treasury bonds versus long term (10-year) treasury bonds. When the short term bonds are worth more than the long terms the yield curve is “inverted” and a recession typically follows about 18 months later.
The current 2-10 yield spread has been dropping since 2014 and was very close to inversion the last time it was measured which was in the fourth quarter of 2018. “We expect it to go inverted sometime this year and that corresponds with a recession in the later part of 2021,” said Boud.…continue reading the rest of this post: ZONDA / METROSTUDY SEES MUCH OF THE SAME IN HOUSING FOR 2019, 2020