Since the 2008 housing bubble burst, the term "recession" has struck a deeper emotional chord than ever before. While there is some disagreement about whether we are currently in a recession, experts believe a recession today would be mild and the economy would recover quickly. According to KPMG's CEO Outlook for 2022:

“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .

 More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”

To add to that sentiment, housing is typically one of the first sectors to rebound during a slowdown. As Ali Wolf, Chief Economist at Zonda, explains:

“Housing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.”

Part of the reason for the rebound is what has historically happened with mortgage rates during recessions. To put your mind at ease, here's a look at interest rates during previous economic downturns.

Mortgage Rates Typically Fall During Recessions

Historical data helps to paint a picture of how a recession might affect the cost of home financing. Looking at recessions in the United States since 1980, the graph below shows that each time the economy slowed, mortgage rates fell.

Source: Freddie Mac, Mortgage Specialists

Fortune explains mortgage rates typically fall during an economic slowdown:

“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 as it takes some time to turn things around even when the recession is technically over.”

While history does not always repeat itself, we can learn from and find comfort in historical trends. Working with a trusted real estate professional can help you make the best decision when buying or selling a home. As a result, you will have expert advice on what a recession might mean for the housing market.

Bottom Line

History shows you don’t need to fear the word recession when it comes to the housing market. If you have questions about what’s happening today, let’s connect so you have expert advice and insights you can trust.