What Does a Recession Mean for The Housing Market?

Recession talk is everywhere. Whether or not we’re actually experiencing a recession remains up for debate by many economists.  According to a recent survey from the Wall Street Journal, 49% of economists believe we’ll see a recession coming in the next 12 months. The idea of a recession sparks fear in many homeowners and potential home buyers because of what happened during the 2008 housing market crisis. However, historical data shows that in most recessions, home price gains have stayed strong and mortgage rates have declined. 

A Recession Doesn’t Mean Falling Home Prices

While mortgage rates continue to fluctuate due to ongoing inflationary pressures, home prices are still on the rise. Historical data shows that home prices don’t fall every time there’s a recession. If you look at the graph below, you’ll notice that home prices appreciated in four of the last six recessions. So, historically, when the economy slows down, it doesn’t necessarily mean home values will fall.

A Recession Could Lead to Lower Mortgage Rates

They say that history has a way of repeating itself. Well, in this situation you can find comfort in the fact that there are statistics that show that each time the economy slowed down, mortgage rates decreased. In fact, over the past 6 recessions, mortgage rates have dropped an average of 1.8%. Why does that happen? Well, during a recession the Federal Reserve tends to lower interest rates to stimulate the economy as it creates an incentive for people to spend money. For those potential home buyers waiting on the sidelines, a recession could be a good time to take advantage of lower interest rates. 

Should I Buy a Home During a Recession?

If you’re thinking of buying a home, should you let a recession slow down your dreams? To make a strong decision, it helps to weigh the pros and cons of buying a home during a recession. Some pros are that there is usually less competition and lower mortgage rates. On the other hand, a recession could lead to stricter lending requirements, fewer options, and more economic uncertainty.

Should I Sell My Home During a Recession?

Whether or not you should sell your home during a recession depends on many factors. Are you buying and selling at the same time? What is your time frame for selling your home? During a recession, it’s extremely important to prepare your home before putting it on the market so that it shines in its best possible light. Marketing strategy and pricing are also crucial, so teaming up with an experienced Realtor will help you achieve your home selling goals. Have more questions? Give us a call at 562.896.2456.

There’s no doubt everyone remembers what happened in the housing market in 2008. But you don’t need to fear the word recession if you’re planning to buy or sell a home. If a move is in your future, let’s connect to discuss our changing market and how it could affect your real estate needs. Fill out the form below or click here to schedule a call.  

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About the Author

Shannon Jones has been selling real estate since 1998 and specializes in listing and marketing homes. She has consistently been one of the top Realtors in the Long Beach area. Prior to her award-winning career in real estate with the Shannon jones Team, Shannon has had successful careers in journalism and public relations. She holds a bachelors degree from UC Irvine and a masters degree from UC Berkeley. Shannon holds E-Pro, CDPE (Certified Distressed Property Expert), and PSC (Pre-Foreclosure Specialist) certifications. Shannon is very personable and maintains a very strong moral compass, always putting the best interest of home buyers/sellers above monetary goals. A California native, Shannon enjoys gardening, travel, reading, cooking and poker when she’s not selling homes MY DESIGNATIONS Lic# 01247705 | CDPE (Certified Distressed Property Expert) | E-Pro | PSC (Pre-Foreclosure Specialist) MY SERVICE AREAS Anaheim Bellflower Buena Park Carson Cerritos Cypress Downey Fountain Valley Garden Grove Huntington Beach La Palma Lakewood Long Beach Los Alamitos Los Angeles County Norwalk Orange County Rossmoor San Pedro Seal Beach Signal Hill South Bay Westminster