The Resilience of the Housing Market: Why it Remains Strong During Tough Times

The Federal Reserve has explained the economic situation while assuring us that there's nothing to be concerned about.
By: Peter Cunha
A Recession Does Not Equal A Housing Crisis
A Recession Does Not Equal A Housing Crisis
MIDDLETOWN, N.J. - May 5, 2023 - PRLog -- As the world seems to be surrounded by potential recession talks, it's only normal to wonder if buying or selling a house is a wise decision. Top-notch experts are now stepping forward to calm the nerves and assure that we are on the right track. If we do officially enter into a recession, there is no need to worry as it is expected to be mild and short-lived.

To better understand how the housing market has performed during previous recessions, let's examine some historical data.

A Recession Doesn't Mean Falling Home Prices

For those who believe that home prices always drop during recessions, historical data tells a different story. Take a look at this graph, which shows that out of six recessions dating back to 1980, home prices appreciated during four of them.

While most people remember the 2008 housing crisis (the larger of the two red bars in the graph above), today's market is different, and another recession won't play out the same way. Back then, there were enough homes for sale that it created a surplus while distressed properties flooded the market. However, today's market has low inventory, meaning that while we may see some declines and gains in prices around different regions, a crash just isn't likely to happen.

Rest assured that maintaining a steady housing market requires an understanding of market fundamentals. For example, the current low inventory, combined with other market factors, means that the housing market won't experience a repeat of 2008.

A Recession Means Falling Mortgage Rates

When the economy slows down, recession is inevitable. But what does this mean for the housing market? As shown in the graph below, this has been the trend historically.

However, if a recession occurs, we can look back at history to see that mortgage rates may fall even below this threshold, although we may not see rates as low as 3% anytime soon. By staying informed about these trends and using this information to make strategic decisions.If there's an economic recession, the impact on the housing market need not be feared.

Keep yourself updated with the latest real estate market updates by visiting our website regularly! If you are thinking of buying or selling a home, do not hesitate to contact us!

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Peter Cunha - Top Realtor in New Jersey

Source:Peter Cunha
Tags:Open Doors Realty NJ
Industry:Real Estate
Location:Middletown - New Jersey - United States
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