The likelihood of a recession is increasing this year, and economic talk is all over the headlines. Many people are left wondering what it means for their purchasing power and the value of their house.

To demonstrate what has transpired in the housing market during each recession, let’s examine some historical data dating back to the 1980s. You might be surprised by the facts.

A Recession Doesn’t Mean Home Prices Will Fall

Many believe that home prices would drop like they did in 2008 if a recession occurs. However, that was the exception rather than the rule. It was the only occasion when prices fell so sharply on the market. And it hasn’t occurred since, primarily due to the general low level of inventory. Inventory is still much below the overabundance of homes that preceded the housing meltdown, even in markets where the number of homes for sale has begun to increase this year.

Home prices actually increased during four of the last six recessions, according to statistics from Cotality (formerly CoreLogic) (see graph below).

Therefore, rates may drop during a recession. Even if it would increase your purchasing power, don’t anticipate a 3% rate of return.

Bottom Line

The odds have improved, but the solution to the recession question remains uncertain.

But that doesn’t mean you have to be concerned about the impact on the real estate market or your home’s worth. We can learn what typically occurs from historical data.

If you want to know how your local market is affected by the state of the economy, Contact Arkansas Real Estate Collective today!