The One Thing Every Homeowner Needs To Know About a Recession

Real Estate Broker/Owner with Arizona Resource Realty BR518926000

A recession does not equal a housing crisis. That’s the one thing that every homeowner today needs to know. Everywhere you look, experts are warning we could be heading toward a recession, and if true, an economic slowdown doesn’t mean homes will lose value.

The National Bureau of Economic Research (NBER) defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

To help show that home prices don’t fall every time there’s a recession, take a look at the historical data. There have been six recessions in this country over the past four decades. As the graph below shows, looking at the recessions going all the way back to the 1980s, home prices appreciated four times and depreciated only two times. So, historically, there’s proof that when the economy slows down, it doesn’t mean home values will fall or depreciate.

The One Thing Every Homeowner Needs To Know About a Recession | MyKCM

The first occasion on the graph when home values depreciated was in the early 1990s when home prices dropped by less than 2%. It happened again during the housing crisis in 2008 when home values declined by almost 20%. Most people vividly remember the housing crisis in 2008 and think if we were to fall into a recession that we’d repeat what happened then. But this housing market isn’t a bubble that’s about to burst. The fundamentals are very different today than they were in 2008. So, we shouldn’t assume we’re heading down the same path.

Bottom Line

We’re not in a recession in this country, but if one is coming, it doesn’t mean homes will lose value. History proves a recession doesn’t equal a housing crisis.

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Comments (4)

Ray Henson
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA

That is a very interesting bar graph and puts recessions and housing price changes into perspective.

May 19, 2022 01:56 PM
Tamra Lee Ulmer

Thanks for your time, Raymond. Happy Friday!

May 20, 2022 10:23 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

The bottom line to me Tamra Lee Ulmer is that recession or not people need a place to live. Another lesson I learned from 2008 is that if you have money you want to BUY real estate. Many of my friends made hundreds of thousands of dollars purchasing distressed homes from 2008 to 2015.

May 19, 2022 02:04 PM
Tamra Lee Ulmer

I agree with you, Bob. Happy Friday

May 20, 2022 10:24 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Tamra Lee Ulmer it is a mistake to compare today's housing market or any other housing market to 2008.  The 2008 housing market had far more things going against it than any other market before or after it.

May 19, 2022 02:18 PM
Tamra Lee Ulmer

Thanks for your time, George. Happy Friday!

May 20, 2022 11:50 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

According to the current administration the economy is doing great, rising gasoline prices is a good thing, the situation is better than ever and inflation has lowered the cost of Thanksgiving dinner. Therefore there is no need to worry about a recession.

Jun 21, 2022 01:16 PM