Recession. It’s an ugly, dirty, scary word. But here’s the thing- though it means the economy is in flux, it isn’t as detrimental to the real estate market as you might think. In fact, the real estate market often thrives during a recession. Let us tell you why-

Looking at the historical data for every recession we’ve experienced in the last 5 decades, only one saw a major reduction in home values: in 2008. It didn’t happen in the 30 years prior, not to that level, and it hasn’t happened since. This is because inventory is still so low overall. Even in markets where the number of homes for sale has started to rise, inventory is still currently far below the oversupply of homes that led to the 2008 housing crash.

And if we dig deeper, we see that in four of the last six recessions, home prices actually went UP, so don’t assume a recession will lead to a significant drop in home values. The data simply doesn’t support that idea. Instead, home prices usually follow whatever trajectory they’re already on. And right now, home prices are rising nationally, just at a more normal pace.

Though home prices usually fair well through economic uncertainty, one thing has historically taken a hit- mortgage rates. When we review the same six most recent recessions, mortgage rates have dropped, every time. That’s good news. But we want to be clear, no one is predicting a return to 3% interest rates, so though mortgage rates may decrease, they aren’t expected to plummet. We’d hate to see you hold out for rock-bottom rates; that likely won’t happen.

There is still a lot of uncertainty around what the economy is going to do, though the odds of a recession are growing. We hope this data gives you confidence when thinking about real estate you own, or are thinking about buying. And if we can give you a little perspective from the trenches- our most savvy real estate investors love it when there is market uncertainty. It means that people are glued to their news outlet of choice instead of actively making moves in the market. Uncertain times are when fortunes are made; at least, that’s what Warren Buffet says. Who are we to argue?

If you have questions about the market or want more information about making a move, now, let’s talk! 760.421.1733