Real Estate News Update: Recession Impacts the Housing Market

If you are looking to buy or sell a house right now, you may be apprehensive to do so based on the current news cycle. This past week, the volatility of the stock market has caused concern for even the most educated economists. This begs the question—are we are headed towards a recession? Of course, this question leads many of us to remember the recession and subsequent housing crash in 2008. As a Real Estate Agent, I have concerns too. But let me ease your mind and help you stay up to date on how the housing market has responded and is responding to Wall Street.

According to Keeping Current Matters, the source of up to date and reliable information on the housing market, we can track the history of home prices and mortgage rates as it relates to the rise and fall of the Stock Market. Read this post from Keeping Current Matters for more details.

Michelle

Here’s What a Recession Could Mean for the Housing Market

Recession talk is all over the news, and the odds of a recession are rising this year. And that leaves people wondering what would happen to the housing market if we do go into a recession.

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 data 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 recession question 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 mind about buying or selling a home?

I’m here to answer such questions. Call me at (440) 413-1818 and lets chat about your concerns related to buying or selling your home.

Michelle