Here’s What a Recession Could Mean for the Housing Market

Recession talk is heating up in 2025, and many are wondering how it could affect the housing market. If you're thinking about buying or selling a home, it’s important to understand what typically happens to home prices and mortgage rates during a recession. Let’s look at the facts!

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Do Home Prices Drop During a Recession?

The short answer: not always.

Many assume that a recession means home prices will crash, especially if they're thinking back to 2008. But history tells a different story. According to data from CoreLogic, in four of the last six recessions, home values actually increased.

The 2008 housing crash was the exception, not the rule. It was fueled by poor lending practices and an oversupply of homes, two conditions we’re not seeing in today’s market.

Right now, home prices are still rising at a more moderate, healthy pace.

Do Mortgage Rates Go Down in a Recession?

While home prices tend to stay on their current path, mortgage rates usually drop during economic slowdowns. Again, looking at data from the last six recessions, mortgage rates fell each time (see graph below):

In each of the last six recessions, mortgage interest rates declined. Lower rates can improve housing affordability, helping more buyers enter the market. But don’t expect to see 3% rates again. A moderate rate drop is more realistic.

What does this mean to Buyers & Sellers?

If you’re planning to buy a home in 2025, don’t wait for a price drop that may never come. Instead, focus on finding the right home and taking advantage of potential interest rate dips.

If you’re looking to sell a home, know that demand remains steady in many markets, especially if inventory stays low. A recession doesn't mean you'll have to take a loss on your property.

Thinking About Buying or Selling a Home in 2025?

Let’s talk! Whether you’re navigating the market for the first time or making your next move, I can help you make smart decisions based on facts, not fear.

Got Questions? Book a Consultation with Me!