To help ease your mind, experts are saying that if we do officially enter a recession, it’s predicted to be mild and short. While a recession may be on the horizon, it won’t be one for the housing market record books like the crash in 2008.
What we have to remember is that a recession doesn’t always lead to a housing crisis. And it doesn’t automatically mean housing prices will fall.
If you look at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. Most people remember the housing crisis in 2008 and think another recession will be a repeat of what happened to housing then.
The fundamentals of this market are different than they were in 2008, so a crash is unlikely. Back then, one of the big reasons why prices fell was because there was a surplus of homes for sale at the same time distressed properties flooded the market.
Today, the number of homes for sale is low, so while home prices may see slight declines in some areas and slight gains in others, a crash simply isn’t in the cards. The silver lining of a recession is usually falling interest rates.
This year, mortgage rates have been quite volatile as they’ve responded to high inflation. The 30-year fixed mortgage rate has hovered between roughly 6-7%, and that’s impacted affordability for many potential homebuyers.
But, if there is a recession, history tells us mortgage rates may fall below that threshold, even though the days of 3% are behind us. The bottom line?
You don’t need to fear what a recession means for the housing market. If we do have a recession, experts say it will be mild and short, and history shows it also means mortgage rates decline.
What is critical is working with an agent experienced in guiding clients through the home buying or selling process regardless of market conditions. That, of course, would be us!
Give Lynne (215-813-6655) or Deb (267-843-0080) a call and breathe easy. Don’t make a move without us!
PHOTO CAP: Lynne Kelleher and Deb Mcintosh, Berkshire Hathaway Home Services, Fox & Roach Realtors