Recession fears are making headlines once again, and understandably so. For many, the question arises: Will a recession cause home values to fall?
It’s a reasonable concern, especially with so much uncertainty in the market. But here’s the good news — history tells a much different story.
According to data from Case-Shiller, as illustrated in the latest MBS Highway snapshot, home values have actually performed remarkably well during and after most recessions. Yes, you heard that right. Despite what instinct might suggest, recessions don’t necessarily drag home prices down. In fact, they often do the opposite.
Let’s unpack this.
If you look at the graph, you’ll see several gray bars representing recessions from 1975 all the way through the 2020 pandemic-driven downturn. Across nearly every one of these economic slowdowns, home values not only held steady but often rose sharply in the years following the recession.
This isn’t just a coincidence. There are clear, practical reasons for this resilience:
1. Housing Is a Basic Need
No matter what’s happening in the economy, people need a place to live. Unlike luxury spending, shelter is essential — and demand rarely disappears. Even during challenging times, families continue to prioritize stable housing.
2. Inventory Often Tightens
Recessions can slow new construction as builders pull back. This results in fewer homes coming to market, keeping inventory low. When supply is limited and demand remains steady, prices tend to hold — or even increase.
3. Lower Interest Rates Support Buyers
To combat recessionary pressures, the Federal Reserve often lowers interest rates. For buyers, this means more affordable mortgage payments and an opportunity to enter the market at favorable terms. Increased buyer activity helps keep prices stable.
4. Real Estate is a Hedge Against Inflation
During periods of economic turmoil, tangible assets like real estate can act as a hedge against inflation. Homeownership provides both shelter and long-term financial security, making it an attractive option when other investments feel volatile.
The Takeaway? Don’t Let Recession Fears Freeze Your Plans.
While every recession is different, history has consistently shown that home values weather the storm far better than many people expect. If you’re waiting on the sidelines for prices to drop dramatically, you might just miss the opportunity to build equity and wealth during a time when others are hesitating.
For prospective homebuyers, this is a crucial time to stay informed, work with a trusted mortgage advisor, and consider your long-term goals. Homeownership remains one of the most reliable ways to build generational wealth — recession or not.
If you’re thinking about making a move, let’s connect. Together, we can explore your options and help you make a confident, informed decision.
Let’s turn uncertainty into opportunity. Reach out today!
Jeffrey Brother
📞 214-714-7251
📧 jeff.brother@fcmhomeloans.com
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