What would a recession mean for the housing market? According to a recent survey from The Wall Street Journal, the percentage of economists who believe we'll see a recession in the next 12 months is growing. When surveyed in July of 2021, only 12% of economists consulted thought there would be a recession by now, but this July when polled, 49% will see a recession in the next 12 months.
But should you delay your home ownership plans? If there is a recession? A recession doesn't mean falling house prices. As this graph illustrates, looking at the recessions going all the way back to 1980, home prices appreciated in four of the last six recessions. So historically, when the economy slows down it doesn't mean home values will fall.
Most people remember the housing crash of 2008, the larger of the two red bars in this graph, and think another recession would repeat what happened then but this housing market isn't about to crash. The fundamentals are very different today than they were in 2008. So don't assume we're heading down the same path. Research also helps paint the picture of how recession could impact the cost of financing a home. As the chart shows, historically each time the economy slowed down, mortgage rates decreased.
Over the past five recessions, mortgage rates have fallen on average 1.8 percentage points from the peak. History doesn't always repeat itself, but we can learn and find comfort from the historical data. Everyone remembers what happened in the housing market in 2008, but you don't need to fear the word recession if you're planning to buy or sell a house. According to historical data, in most recessions home price gains have stayed strong and mortgage rates have declined.
If you're thinking about buying or selling a home, let's connect so you have expert advice on what's happening in the housing market here in south Florida and what that means for your home ownership goalsPosted by Andy Mandel on