Many people wonder what to expect if we head into a recession, especially if they had plans to buy or sell a home in the near future. While no one has a crystal ball, perhaps the best way to gauge what to expect is to look at the history of recessions. Let's consider the last 6 recessions. For many, the most memorable recession is 2008, since it was the most recent. If you study the specific factors that impacted real estate during that recession, subprime mortgages and loose lending standards were major factors of which were subsequently resolved with new financial legislation and reform. Home prices decreased by 19.7%.
However, in 4 of the last 6 recessions home prices actually appreciated. In the chart below, the 1991 recession only resulted in a 1.9% price decrease. Clearly, if history repeats itself as in the majority of recessions, home prices will continue to appreciate.
Still, we shouldn't expect the appreciation rates to continue at the same rates as in the last 2 years. Those were not sustainable rates. The good news is that with more housing inventory, there are more choices for homebuyers with prices moderating. With so many years of pent-up buyer demand since the pandemic, the millennials becoming of age to buy homes, and interest rates that remain below inflation, sellers should still realize good home prices. So, if you are considering buying or selling a home, don't hold back on your plans. Feel free to contact me for a private consultation to discuss your options now and in the near future.
