What an Economic Slowdown Could Mean for the Housing Market

Lately, the news has been filled with talk about the economy and the rising chances of a recession this year. Naturally, many people are asking: What does this mean for the value of my home and my ability to buy one?

Let’s break it down using historical data going back to the 1980s. The facts might surprise you.

A Recession Doesn’t Always Mean Falling Home Prices

Many assume that if a recession hits, home prices will drop—just like in 2008. But 2008 was unusual. It was the only time in recent history when home values fell sharply. That crash happened because of an oversupply of homes and risky lending practices—conditions that aren’t present today.

Even with inventory increasing in some areas this year, the overall number of homes for sale is still low. That means we’re not seeing the same kind of supply imbalance we had back then.

In fact, according to data from Cotality (formerly CoreLogic), home prices actually rose during four of the last six recessions.

So, the idea that a recession always causes home values to drop just isn’t supported by the data. Typically, home prices continue on the same path they were already on—rising or staying steady.

Mortgage Rates Often Drop in a Recession

Even though home prices usually stay stable, mortgage rates tend to go down during a recession. History shows that in each of the last six recessions, mortgage rates declined.

Lower rates can increase your buying power. But it’s important to have realistic expectations—rates likely won’t go back down to the 3% range we saw in 2020-2021.

Bottom Line

Yes, the chances of a recession have increased. But that doesn’t necessarily mean bad news for the housing market. Home prices usually hold steady—or even rise—and mortgage rates often go down.

If you're curious about how the current economy is affecting home prices or interest rates in our area, feel free to reach out.

Finding ways to make your credit score better could help you get a lower mortgage rate. When you’re ready to get the process started, let’s connect.