Everyone’s talking about a possible recession, and the chances of it happening this year are going up. That’s got a lot of people wondering—what would that mean for the housing market?
Let’s dive into some historical data and see how the housing market has reacted to every recession since the 1980s.
A Recession Doesn’t Always Mean Home Prices Drop
A lot of people assume that if we hit a recession, home prices will crash like they did in 2008. But that was actually the exception, not the norm. In fact, that was the only time we saw such a big drop—and it hasn’t happened since.
Believe it or not, data from CoreLogic shows that in four of the last six recessions, home prices actually increased (check out the graph below):
If you’re thinking about buying or selling a home, don’t assume a recession means home prices will crash—it just doesn’t line up with the data. Historically, prices tend to stay on the path they’re already on. And right now, on a national level, home prices are still rising at a more typical pace.
Mortgage Rates Tend to Drop During Recessions
While home prices usually stay on their current track, mortgage rates tend to go down during economic slowdowns. In fact, if you look at the data from the last six recessions, mortgage rates dropped every single time (check out the graph below):
So, based on the data, a recession could lead to lower mortgage rates. While that could make things a bit more affordable, don’t count on seeing rates drop back to 3%.
Bottom Line
We still don’t know for sure if a recession is coming, but the chances are looking higher. However, that doesn’t mean you have to guess how it’ll affect the housing market—historical data already gives us a pretty good idea of what usually happens.
When you hear people talking about a possible recession, what worries or questions pop up for you about buying or selling a home?
