What Happens To The Housing Market During A Recession?

A Recession Doesn't Equal A Housing Crisis

People are talking about a possible recession everywhere you go. And if you want to buy or sell a house, you might wonder if your plans are still a good idea. Experts say that if we do officially go into recession, it will be mild and short, which should put your mind at ease. At their meeting in March, the Federal Reserve said:

". . . the staff's projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years."

Even though a recession may be coming, it won't be as bad as the housing market crash in 2008. We should keep in mind that a recession doesn't always cause a housing problem.

Let's look at what happened in real estate during past recessions to show that this is true. So, you'll know why you shouldn't worry about what a recession might mean for the home market right now.

A Recession Doesn't Mean Home Prices Will Come Tumbling Down

Historical data shows that home prices don't always go down when there's a recession. Home prices have gone up in four of the last six recessions, which go all the way back to 1980. So, when the market slows down, it doesn't always mean that the value of a home will go down.

Most people remember what happened during the housing problem in 2008, and they think that if there is another recession, the same thing will happen to housing again. But the foundations of the housing market are different now than they were in 2008, so the market is not about to crash. Back then, prices went down because there were too many homes for sale at the same time that distressed properties filled the market. There aren't many homes for sale right now, so even though prices may go down slightly in some places and up slightly in others, a crash isn't likely.

When There Is A Recession Mortgage Rates Go Down

A recession for the real estate market usually means that mortgage rates will go down. Whenever the economy slowed down in the past, mortgage rates went down.

Bankrate says that when the economy slows down, mortgage rates tend to go down:

"During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers."

As a result of high inflation, borrowing rates have been volatile this year. The 30-year fixed mortgage rate has been around 6-7%, making it harder for many people who want to buy a home.

But history shows that if there is a recession, mortgage rates may drop below that level, even though the days of 3% rates are over.

Bottom Line

You shouldn't worry about what a recession will do to the home market. Experts say that if we do have a recession, it will be mild and short, and history shows that when this happens, mortgage rates go down.

If you want to buy or sell a home in Cobb County or the Atlanta area or just have questions, please don’t hesitate to get in touch with us!

Complete Realty Team
Ken Mandich - REALTOR®
Phone: [phone]
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Address: 1642 Powers Ferry RD Unit 150
Marietta, GA 30067

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ERA Sunrise Realty
David Moody - Broker
Office: 678-781-7400

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Check out our video "2023 Foreclosure Rate: Nothing Like The Housing Market Crash Of 2008" :

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