Leave a Message

Thank you for your message. We will be in touch with you shortly.

What Happens to Housing when There’s a Recession?

What Happens to Housing when There’s a Recession?
Since the 2008 housing bubble burst, the word recession strikes a stronger emotional chord than it ever did before. And while there’s some debate around whether we’re officially in a recession right now, the good news is experts say a recession today would likely be mild and the economy would rebound quickly. As the 2022 CEO Outlook from KPMG says:
 
“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .
 
 More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”
 
To add to that sentiment, housing is typically one of the first sectors to rebound during a slowdown. As Ali Wolf, Chief Economist at Zondaexplains:
 
“Housing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.”
 
Part of that rebound is tied to what has historically happened to mortgage rates during recessions. Here’s a look back at rates during previous economic slowdowns to help put your mind at ease.
 
Mortgage Rates Typically Fall During Recessions
 
Historical data helps paint the picture of how a recession could impact the cost of financing a home. Looking at recessions in this country going all the way back to 1980, the graph below shows each time the economy slowed down mortgage rates decreased.
 
What Happens to Housing when There’s a Recession? | MyKCM
 
Fortune explains mortgage rates typically fall during an economic slowdown:
 
Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”
 
While history doesn’t always repeat itself, we can learn from and find comfort in the trends of what’s happened in the past. If you’re thinking about buying or selling a home, you can make the best decision by working with a trusted real estate professional. That way you have expert advice on what a recession could mean for the housing market.
 

Bottom Line

 
History shows you don’t need to fear the word recession when it comes to the housing market. If you have questions about what’s happening today, let’s connect so you have expert advice and insights you can trust.

Recent Blog Posts

Stay up to date on the latest real estate trends.

Headed Back Into the Office? You May Decide To Move

A growing number of companies are requiring employees to return to the office. And that’s leading some people to make decisions about where they live and if they need … Read more

SF Market Update - February 2025

Mortgage rates have ticked back up to roughly the same levels, as they were at prior to the Fed issuing its first rate cut in September.

East Bay Market Update - February 2025

Inventories are one of the most important leading indicators of price trends, and we’re seeing quite the increase in inventories in the East Bay in terms of both singl… Read more

The Perks of Buying a Fixer-Upper

If you’re willing to roll up your sleeves (or hire someone who will), buying a house that needs some work could open the door to homeownership.

3 Reasons To Buy a Home Before Spring

You might even be thinking, “Should I just wait until spring when more homes hit the market and rates might be lower?” But here’s the thing, no one knows for sure whe… Read more

SF Market Update - January 2025

The Federal Reserve’s interest rate cuts in 2024 provided some relief to some borrowers, but mortgage rates have remained stubbornly high. As of January 2, 2025, the a… Read more

East Bay Market Update - January 2025

The 2024 housing market looked progressively healthier with each passing month until Q4. The promising build in inventory during the first nine months of the year was … Read more

Expert Forecasts for the 2025 Housing Market

Experts are forecasting rates could settle in the mid-to-low 6% range by the end of the year.

San Francisco Market Update - December 2024

Elevated mortgage rates dominated the housing market in 2024, and 2025 may look similar if inflation starts to ramp up again.

Let’s Talk

You’ve got questions and we can’t wait to answer them.