A recession is defined as a significant decline in economic activity lasting more than a few months. It is typically characterized by a decrease in jobs, a decrease in production and sales, and an increase in bankruptcies and foreclosures. So what will happen to real estate if we enter a recession?
In short, no one really knows for sure. Some experts predict that home prices will fall, while others believe that the market is recession-resistant. However, there are a few things we can look at to get a better idea of how the market might react.
First, we can look at data from previous recessions. According to historical data, the real estate market has generally fared quite well during recessionary periods. In fact, prices often continue to rise, even as other sectors of the economy contract. This trend may be due in part to the fact that people view housing as a necessity, even during tough economic times. Additionally, many people see real estate as a long-term investment, meaning they are less likely to sell during a recessionary period.
Another factor to consider is the current state of the housing market. Home prices have been rising steadily for several years now, and many experts believe we are due for.