Talk of a potential recession is circulating widely, leading many to question how such an event might impact the housing market. While economic slowdowns can feel uncertain, a look at historical data offers reassuring insights into what typically happens during these periods.

A Recession Doesn’t Always Mean Falling Home Prices

Many assume that a recession will automatically lead to a drop in home prices, drawing comparisons to the housing crash of 2008. However, that situation was an outlier caused by a unique set of circumstances. In reality, the data tells a different story.

According to CoreLogic, home prices actually increased in four of the last six recessions (see graph below):

This trend shows that home prices often remain stable or even grow during economic downturns. So if you’re planning to buy or sell, don’t let fears of a price crash hold you back. The current market shows that home prices are still appreciating at a more sustainable, healthy pace.

Mortgage Rates Tend to Fall During Recessions

Another key trend during recessions is the behavior of mortgage rates. Unlike home prices, mortgage rates consistently decrease during economic slowdowns. Looking back at the last six recessions, mortgage rates fell every single time (see graph below):

This means that even if a recession occurs, it could lead to lower borrowing costs, making it more affordable to finance a home. While we may not return to the ultra-low 3% rates seen in recent years, any decline would still be a welcome help for homebuyers.

Bottom Line

Though economic uncertainty can be unsettling, history offers a clear picture of how the housing market typically performs during recessions. Home prices often remain steady or rise, and mortgage rates tend to drop, potentially improving affordability. If you’re thinking of making a move, staying informed and grounded in the data is the best way to approach your decision.

Have questions or want to discuss your unique situation? Reach out to Mike Panza and the team at Panza Home Group for personalized guidance. You can connect with them anytime here: https://panzarealestate.com/team/mike-panza