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What will happen to real estate if we go into a recession?


Everywhere you look, experts are warning we could be heading toward a recession, and if true, an economic slowdown doesn’t necessarily mean homes will lose value. A recession does not equal a housing crisis. Remember that historical context is important. Take a look at the chart below for some helpful perspectives. In 4 out of the last 6 recessions (see chart below), home prices have continued to appreciate.

If a recession happens, it does not necessarily mean home prices will decline. This is one of the most important pieces of information you need to understand as a homeowner or potential buyer. The other big takeaway if a recession happens: interest rates usually go up at the beginning of an economic decline, but in order to stimulate the economy, they will typically fall. “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.” - Fortune The days of mortgage rates below 3% may be behind us for a while, but we don't know for sure if they’re only going to go up from here. We need to focus on the big picture. The housing market is still very strong, and previous projections are already outperforming what industry experts forecasted earlier this year. All major real estate institutions forecast at least 6 million homes sold in 2022, which is good news for the economy. ---------------------------------------------------------------------------------------------------------------------- Looking to buy or sell in the Sacramento, Placerville, or Yolo area? We're here to answer any questions you may have. Drop us a note today!

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