Recent tariff news and declining consumer confidence have sparked growing concerns about an economic recession. While this is by no means certain, the odds of a recession occurring this year have significantly increased.
Some media stories are surfacing about how a recession could hurt the housing market. In fact, a recent article from Realtor.com warned potential homebuyers that a recession would drive home prices lower.
But it appears that these media sources are driving fear instead of facts. Here is the reality: Over the past 50+ years, there have been seven recessions. Home values have risen in six of the seven recessions, and the only time they declined was due to overly relaxed mortgage qualifications.
The absence of this anomaly would suggest that home values should be well supported even during recessionary conditions.
Here’s why: It’s true that the unemployment rate tends to rise during recessions, which would reduce the number of qualified homebuyers. However, recessions also cause interest rates to decline. And the additional number of qualified homebuyers is more than compensates for the rise in unemployment.
So, while economic uncertainty may lie ahead, history suggests the housing sector may prove resilient in the face of a potential recession.
