The economy is a hot topic in the media, and with discussions of a potential recession gaining traction, it’s natural to wonder how it could affect the value of your home and your ability to buy. Fortunately, a look at historical trends provides some reassuring insights.

A Recession Doesn’t Automatically Mean Falling Home Prices

It’s a common misconception that a recession inevitably leads to plummeting home prices. Many people recall the sharp decline during the 2008 financial crisis and assume that’s the norm. However, that event was a unique outlier, driven by an oversupply of homes and irresponsible lending practices—not the typical recession scenario.

Today’s housing market is quite different. Inventory remains historically low, which continues to support home values. Even in areas where listings have increased mildly this year, we’re still far from the overabundance that sparked the last crash.

In fact, data from [Cotality (formerly CoreLogic)] shows that in four of the last six U.S. recessions, home prices actually increased. Take a look at the graph below for a clearer picture:

This trend suggests that, more often than not, home prices tend to stick to their existing trajectory. Currently, that trajectory remains upward, although at a more sustainable and balanced pace compared to the rapid surges seen during the pandemic years.

Mortgage Rates Often Drop During Economic Slowdowns

While home prices generally stay steady or even rise, mortgage rates tend to fall during a recession. Lower rates can be a silver lining for prospective buyers, improving affordability and increasing purchasing power.

Data from the past six recessions supports this: mortgage rates declined during each one. Here’s an overview of how rates performed during those periods:

That means if a recession does occur, we could see a dip in mortgage rates again. While we may not return to the ultra-low 3% rates seen in 2020 and 2021, even a modest drop could make buying more accessible for many.

The Bottom Line

Although the possibility of a recession remains uncertain, historical data offers optimism for homeowners and buyers alike. Home prices typically maintain their course, and mortgage rates often move favorably. That’s great news if you’re considering buying, selling, or just keeping an eye on the market.

If you’re curious about how today’s economic conditions could impact your specific real estate goals, don’t hesitate to contact Mike Panza and the team at Panza Home Group. They’re always happy to provide expert guidance tailored to your needs.

For more information, visit: https://panzarealestate.com/team/mike-panza