What a recession could mean for the housing market

A recession is defined as "a period of temporary economic downturn during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."  In other words, it's when the economy takes a turn for the worse. Recessions can last for months or even years, and often have far-reaching effects on different sectors of the economy.

In this blog post, we're going to take a look at how past recessions have affected the housing market and what a recession could mean for you if you're thinking about buying a house in the near future.

How Have Past Recessions Affected the Housing Market?
Recessions haven't always been bad for the housing market. In fact, during some periods of recession, the housing market has actually thrived. For example, during the recession of 1981-1982, home prices actually rose by 2.1%!

However, that isn't always the case. More often than not, recessions have resulted in lower interest rates, which is good news if you're looking to buy soon. For instance, during the most recent recession (2007-2009), interest rates on 30-year fixed-rate mortgages fell from almost 6% in 2007 to around 3.5% by early 2009.

Of course, recessions also typically result in job losses—which can impact people's ability to afford a mortgage payment—and foreclosures. However, foreclosures tend to happen more often during periods of economic expansion because that's when people are more likely to take on riskier loans that they might not be able to afford if the economy takes a turn for the worse.

What Does This Mean for You?
If you're thinking about buying a house in the near future, paying attention to recessionary trends is important. If we do enter into a recession—which some economists believe is likely—it could result in lower interest rates, which would be good news for you as a potential homebuyer. However, it's also important to keep an eye on job security and your overall financial situation before taking on any new debts like a mortgage payment.

Recessions are complicated and can often have far-reaching effects on different sectors of the economy—including the housing market. In this blog post, we took a look at how past recessions have affected the housing market and what a recession could mean for you if you're thinking about buying a house soon. While lower interest rates could be good news for homebuyers if we do enter into a recession in the next few years, it's also important to keep an eye on overall trends and your personal financial situation before making any big decisions.