What Happens to Housing when There’s a Recession?
Since the 2008 housing bubble burst, people have been more likely to associate the word recession with personal trauma than in previous years. Though there is debate about whether we are currently in a recession, economists predict that if one does occur it would be short-lived and the recovery would happen fairly 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 Zonda, explains:
“Housing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.”
It's important to remember that mortgage rates tend to drop during recessions. To help put your mind at ease, take a look back at the following historical examples of how mortgage rates have changed during previous economic slowdowns.
Mortgage Rates Typically Fall During Recessions
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 draw comfort from the trends that have emerged in past events. If you’re looking to buy or sell a home, working with an experienced real estate professional can help ensure that your decision is based on accurate information about the current housing market.
History shows that the housing market has weathered many economic downturns, and experts agree that this time is no different. If you have questions about what’s happening today in our markets, connect with The Perreault Group so we can provide expert advice and insights to help make your decision-making easier.