Recession Talk: What It Means for the Housing Market
Alright, folks, we’ve been hearing it: the dreaded “R” word. Recession. It’s all over the news, and, let’s be real, it’s got people on edge. With the odds of a recession rising this year, the big question on everyone’s mind is: “What happens to the housing market if we do hit a recession?”
That’s a great, and valid, question. Thankfully, we have some answers. 👇
If you’re sitting there wondering if home prices are going to crash like they did in 2008, we’ve got some historical data that’ll help clear things up. Spoiler alert: it’s not as simple as “recession equals falling home prices.”
A Recession Doesn’t Automatically Mean Home Prices Will Drop
There’s this common misconception that every recession leads to plummeting home prices. It’s like a knee-jerk reaction we’ve all had since 2008, when home prices took a nosedive. But–here’s the twist–that was en exception, not the norm. The 2008 crash was a result of unique circumstances (subprime mortgages, anyone?) and hasn’t been repeated in recent history.
In fact, let’s break it down with some data. According to CoreLogic, over the past six recessions, home prices actually went up during four of them. Yep, that’s right–home prices increased, not decreased. It’s kind of like assuming every storm is going to be a hurricane just because you got hit by one. That’s not how it works, and the housing market is no different.
So, if you’re thinking about buying or selling, don’t let recession panic lead you to assume the worst. Historical data tells us home prices are likely to follow their existing trajectory. And right now, nationwide, home prizes are still increasing, but at a more normal pace. No wild swings–just steady growth.
Mortgage Rates Typically Drop During Recessions
Okay, home prizes may stay on track, but what about mortgage rates? Surely those are going to shoot up, right? Surprisingly, history tells us something a little different. Typically, when the economy slows down, mortgage rates drop. And looking back at the last six recessions, we’ve seen this trend every time. A little relief on the interest rate front is usually part of the deal.
Now, let’s manage those expectations. Mortgage rates might come down a bit, but let’s not kid ourselves—we’re probably never seeing those dreamy 3% rates again. So don’t hold your breath. But hey, even a small drop can make homeownership more affordable and bring those monthly payments down compared to today’s rates.
Look, we don’t have a crystal ball, so we aren’t predicting the future of the economy or saying exactly where the housing market will go. Historical data shows that if a recession does hit, home prices typically stay on their current path–rising at a more normal rate–and mortgage rates tend to decline, giving buyers a potential advantage. So, if you’re worried that a recession means you should hit pause on buying or selling, take a deep breath. The data tells a different story.
Bottom line, if you’re on the fence about making a move and your current home no longer fits your needs, let’s talk. Click here to schedule a 15 minute call.
Source: Keeping Current Matters
