What a Recession Could Mean for the Housing Market

There’s talk of a possible recession all over the news, as the odds of one happening are rising this year. That leaves people wondering what would happen to the housing market if one does occur.

Let’s take a look at some historical data to show what’s happened in housing for each recession going all the way back to the 1980s.

A Recession Doesn’t Mean Home Prices Will Fall

Many people think that if a recession hits, home prices will fall like they did in 2008. But that was an exception, not the rule. It was the only time we saw such a steep drop in prices. And it hasn’t happened since.

In fact, according to data from CoreLogic, in four of the last six recessions, home prices actually went up (see graph below):

So, if you’re thinking about buying or selling a home, don’t assume a recession will lead to a crash in home prices. The data simply doesn’t support that idea. Instead, home prices usually follow whatever trajectory they’re already on. And right now, nationally, home prices are still rising at a more normal pace.

Mortgage Rates Typically Decline During Recessions

While home prices tend to stay on their current path, mortgage rates usually drop during economic slowdowns. Again, looking at date from the last six recessions, mortgage rates fell each time (see graph below):

So, a recession means mortgage rates could decline based on the data. While that would help with affordability, don’t expect the return of a 3% rate.

Bottom Line

The answer to the question as to whether a recession will happen this year is still unknown, but the odds have gone up. But that doesn’t mean you have to wonder about the impact on the housing market – historical data tells us what usually happens.

When you hear talk about a possible recession, what concerns or questions come to your mind about buying or selling a home? Please connect with us at 508-360-5664 or [email protected] and we’ll do the best we can to answer your concerns.

…and don’t forget that on April 19 from 1:00pm – 3:00pm, Great White Shred will be available in the Today Real Estate parking lot on Cotuit Road in Sandwich to safely dispose of your valuable documents. Thanks to Patti Lotane/Cape Cod Five and Aerial Advantage Photography for their support.

Mari and Hank

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.