WHAT WILL HAPPEN TO REAL ESTATE IN A RECESSION?

Anyone who remembers the 2008 housing market crash gets nervous when they hear the word “recession.” Context is everything, though. The 2008 crash was years in the making, fueled by loose lending standards that created a housing bubble. The housing market is much more protected from a crash today, should a recession occur. In the last four of six recessions, home prices have continued to appreciate, so a recession does not automatically mean that home values will decline. Just as important to note is that interest rates typically go up at the beginning of a recession, but it doesn’t mean they will stay there. Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact. So, while we might not see the extremely low interest rates we have over the past couple of years, that doesn’t mean that they’re only going up from here.