There's a lot of chatter in the news about a potential recession, and it seems more likely this year. This has many people curious about what might happen to the housing market if we actually enter a recession.

Let’s check out some historical data to see how housing has been impacted during each recession since the 1980s.

A Recession Doesn’t Mean Home Prices Will Fall

A lot of folks believe that if we enter a recession, home prices will drop significantly like they did back in 2008. However, that was an unusual situation, not the norm. In fact, that steep decline in prices was a one-time event, and we haven't seen anything like it since.

Interestingly, data from CoreLogic shows that home prices have risen in four out of the last six recessions.

If you're considering buying or selling a home, don't jump to the conclusion that a recession will cause home prices to plummet. The evidence doesn’t back that up. Typically, home prices continue on their established path. Currently, home prices across the country are still increasing at a normal rate.

Mortgage Rates Typically Decline During Recessions

Home prices generally remain stable, while mortgage rates typically decrease during economic downturns. If we look at the data from the last six recessions, we can see that mortgage rates have dropped each time.

A recession might lead to lower mortgage rates according to the data. While that could improve affordability, don’t count on seeing 3% rates again.

Bottom Line

We still don’t know for sure if we’re heading into a recession, but the likelihood has increased. However, you don’t need to be uncertain about how this might affect the housing market; historical trends can give us a clear picture of what typically occurs in these situations.

When people bring up the potential for a recession, what worries or questions do you have about buying or selling a home?