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Will a Recession Affect the Housing Market?
Many people are concerned about the state of the economy. According to The Wall Street Journal, 3/4 three-quarters of CEOs feel that we are in a recession or will be in the next 12-18 months. This can definitely affect the real estate market, and we are seeing the market shift as we speak. Just in the last 2 months we have seen less bidding wars, longer days on market, and an increase in the number of price reductions on homes actively on the market. This seems to be a result of a combination of rising interest rates, which have reduced purchasing power for buyers in the market, but also an increase in the number of homes being listed for sale.
Mortgage Rates During Past Recessions
Let’s look at how mortgage rates have behaved over the last 40 years during times of recession. While there is no way to know how the market will behave and what will happen, it’s still good to reflect on how past recessions have historically affected the real estate market. Over the last 40 years, mortgage rates have actually fallen during times of recession, an average of 1.8 percentage points from peak over the last 5 recessions. History also tells us the recessions does not automatically mean we are going to see a housing crisis.
So as you consider your next real estate move, note that recession does not mean 2008, and we can help give you a great real estate experience. Reach out to my team to find out what the buying or selling process would look like for you.