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What a Recession Could Mean for the Housing Market – And How to Guide Your Clients Through It

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Arnold Consulting, Inc. ,

Recession fears are making headlines again, and many people are wondering: If we do enter a recession, what does that mean for the housing market? As a real estate professional, it’s crucial to understand these trends so you can educate and reassure your clients with facts, not fear.

Let’s take a look at the historical data to see how the housing market has performed during past recessions—and what that means for buyers and sellers today.

A Recession Doesn’t Mean Home Prices Will Plummet

A common misconception is that a recession automatically leads to a housing crash. Many people still remember the steep drop in home prices during 2008, but that was an outlier, not the norm. In fact, in four of the last six recessions, home prices actually increased.

So, if your clients are waiting for prices to drop significantly before making a move, they may be waiting for something that’s unlikely to happen. Historically, home prices tend to follow their current trajectory, and right now, that means prices are still rising at a more typical pace.

Mortgage Rates Typically Decline During Recessions

Another key trend? Mortgage rates tend to fall during economic downturns. Data from the last six recessions shows that interest rates declined each time, making homebuying more affordable.

While this doesn’t mean we’ll see a return to ultra-low 3% rates, a potential dip could create a window of opportunity for buyers who have been struggling with affordability.

How to Guide Your Clients in Uncertain Times

  • For Buyers: If rates decline, it could be a great time to lock in a lower rate and get more home for their money. Encourage them to stay prepared and act when the opportunity presents itself.

  • For Sellers: Home prices historically remain stable or rise during recessions. If your clients are thinking about selling, remind them that demand is still strong, and they should focus on realistic pricing and strategic marketing.

  • For Yourself: Now is the time to position yourself as the expert. Your clients will be looking to you for guidance, and being proactive in sharing market insights will build trust and set you apart.

The Bottom Line

While we can’t predict the future, history gives us strong indicators of how the housing market tends to react in a recession. Instead of letting clients get caught up in fear-driven headlines, use this knowledge to provide clarity and confidence in their decision-making.

What questions are your clients asking about the potential recession? Let’s connect and ensure you have the right answers to guide them through any market conditions.

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