Everyone's talking about the economy lately, and with more chatter about a possible recession this year, a lot of folks are starting to wonder—what does that mean for home values and how far their money will go if they're looking to buy?

 

Let’s take a quick look back at how the housing market has actually performed during past recessions, all the way since the 1980s—you might be surprised by what the numbers show.

 

A lot of people assume that if we hit a recession, home prices will drop like they did back in 2008. But here’s the thing—that was a unique situation, not the norm. That was the only time we saw such a sharp decline in prices. Since then, things have been very different, mainly because there just aren’t enough homes for sale. Even in areas where inventory has picked up a bit this year, it’s still nowhere near the flood of listings we had leading up to the housing crash.

 

Believe it or not, data from Cotality (which used to be called CoreLogic) shows that in four out of the last six recessions, home prices actually went up—not down. (Check out the graph below!)

 

 

So, don’t automatically think a recession means home prices are going to take a big dive—the numbers just don’t back that up. In most cases, prices tend to keep moving in the direction they’re already headed. And right now, on a national level, home prices are still going up—just at a more typical, steady pace.

 

While home prices usually stay on the path they’re already on, mortgage rates tend to do the opposite during a slowdown—they usually drop. In fact, if you look at the data from the last six recessions, mortgage rates fell every single time (check out the graph below).

 

So, if a recession hits, rates could go down, which would give your buying power a bit of a boost. But, just to set expectations, don't count on seeing those 3% rates come back.

 

We still don’t know for sure if a recession is coming, but the chances have definitely increased. That said, you don’t need to stress about what it might mean for the housing market or the value of your home. The historical data shows us what tends to happen in these situations.

 

If you're curious about how the current economy is affecting our local market, let's chat!