Leave a Message

Thank you for your message. We will be in touch with you shortly.

What Past Recessions Tell Us About the Housing Market

January 16, 2023

Market Update

What Past Recessions Tell Us About the Housing Market

What Past Recessions Tell Us About the Housing Market

It doesn’t matter if you’re someone who closely follows the economy or not, chances are you’ve heard whispers of an upcoming recession. Economic conditions are determined by a broad range of factors, so rather than explaining each in-depth, let’s lean on the experts and what history tells us to see what could lie ahead. As Greg McBride, Chief Financial Analyst at Bankratesays:

“Two-in-three economists are forecasting a recession in 2023 . . .”

As talk about a potential recession grows, you may be wondering what a recession could mean for the housing market. Here’s a look at the historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession could mean for the housing market today.

A Recession Doesn’t Mean Falling Home Prices

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. According to experts, home prices will vary by market and may go up or down depending on the local area. But the average of their 2023 forecasts shows prices will net neutral nationwide, not fall drastically like they did in 2008.

A Recession Means Falling Mortgage Rates

Research also helps paint the picture of how a recession could impact the cost of financing a home. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.

What Past Recessions Tell Us About the Housing Market in 2023 | MyKCM

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.”

In 2023, market experts say mortgage rates will likely stabilize below the peak we saw last year. That’s because mortgage rates tend to respond to inflation. And early signs show inflation is starting to cool. If inflation continues to ease, rates may fall a bit more, but the days of 3% are likely behind us.

The big takeaway is you don’t need to fear the word recession when it comes to housing. In fact, experts say a recession would be mild and housing would play a key role in a quick economic rebound. As the 2022 CEO Outlook from KPMG, says:

“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.”

Bottom Line 

While history doesn’t always repeat itself, we can learn from the past. According to historical data, in most recessions, home values have appreciated and mortgage rates have declined.

If you’re thinking about buying or selling a home this year, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.

Explore Our Other Blogs

Stay Updated On Our Most Recent Blog Posts

Is Summer a Good Time to Sell in San Jose An Honest Look for Undecided Homeowners in Evergreen and Silver Creek

Seller's Real Estate Tips

Is Summer a Good Time to Sell in San Jose? An Honest Look for Undecided Homeowners in Evergreen and Silver Creek

Brian Ng  |  July 30, 2025

Is Summer a Good Time to Sell in San Jose? An Honest Look for Undecided Homeowners in Evergreen and Silver Creek
Real Estate Investors Near Me: Your San Jose Networking Guide

Real Estate

Real Estate Investors Near Me: Your San Jose Networking Guide

Brian Ng  |  July 30, 2025

Real Estate Investors Near Me: Your San Jose Networking Guide
Still on the Fence After Spring A Trusted Realtor’s Guide to Navigating the Summer Real Estate Market in Evergreen & Silver Creek

Real Estate

Still on the Fence After Spring? A Trusted Realtor’s Guide to Navigating the Summer Real Estate Market in Evergreen & Silver Creek

Thao Dang Pham  |  July 29, 2025

Still on the Fence After Spring? A Trusted Realtor’s Guide to Navigating the Summer Real Estate Market in Evergreen & Silver Creek
Top Real Estate Investors: Lessons from the Pros for San Jose Success

Real Estate

Top Real Estate Investors: Lessons from the Pros for San Jose Success

Thao Dang Pham  |  July 29, 2025

Top Real Estate Investors: Lessons from the Pros for San Jose Success
What Are the 4 Types of Real Estate? A Clear Guide for San Jose Investors

Real Estate

What Are the 4 Types of Real Estate? A Clear Guide for San Jose Investors

Brian Ng  |  July 28, 2025

What Are the 4 Types of Real Estate? A Clear Guide for San Jose Investors
What Does ‘Client-First’ Mean for a San Jose Realtor in the Summer Market (Evergreen & Silver Creek Perspectives)

Real Estate

What Does ‘Client-First’ Mean for a San Jose Realtor in the Summer Market (Evergreen & Silver Creek Perspectives)

Brian Ng  |  July 28, 2025

What Does ‘Client-First’ Mean for a San Jose Realtor in the Summer Market (Evergreen & Silver Creek Perspectives)

Let's Talk

You’ve got questions and we can’t wait to answer them.

FOLLOW US ON INSTAGRAM