If you’re thinking about buying or selling a home, the latest headlines about a potential recession may have you wondering if now is really the right time to make a move. With economic uncertainty making its way back into the spotlight, many would-be buyers and sellers are hitting pause in hopes that the market will shift in their favor.
In fact, a recent study by John Burns Research and Realtor.com found that nearly 30% of surveyed buyers are waiting for a recession, believing it might bring lower mortgage rates and home prices. While that logic makes sense at first glance, history shows it may not work out the way they expect.
Let’s dive into what actually happens during a recession and how it impacts mortgage rates, home prices, and your opportunity to buy or sell.
Mortgage Rates Often Drop During Recessions
There is some truth to the idea that a recession could help bring mortgage rates down. Historically, when the economy slows down, the Federal Reserve may respond by lowering interest rates to stimulate activity. That can often bring mortgage rates down, making home loans more affordable for buyers.
If you look back at the last six U.S. recessions, mortgage rates fell each time. Lower rates increase buyer purchasing power, and in turn, can help make monthly payments more manageable.
But here's the catch: Waiting for a recession to buy in hopes of scoring a better rate comes with a risk. If too many buyers jump back in once rates drop, the competition will heat up, and home prices may rise even faster than they are now.
Home Prices Typically Don’t Drop in Recessions
A common myth is that recessions cause home prices to crash. While the 2008 housing crisis did see steep price declines, that was a unique situation caused by risky lending and oversupply. In reality, home prices rose in four of the last six recessions.
Today’s market is very different from 2008. Lending standards are much tighter, and inventory remains well below what’s considered normal. Demand continues to outpace supply in many markets, including areas like Queen Creek, Gilbert, and Mesa in Arizona. Even if a recession occurs, a significant price drop is unlikely.
As Robert Frick, Corporate Economist at Navy Federal Credit Union, puts it:
“Hopes that an economic slowdown will depress housing prices are wishful thinking at this point . . .”
What Buyers Should Know
If you're a buyer hoping for a recession to bring better prices and lower rates, consider this: by waiting, you risk facing increased competition and higher home prices once conditions improve. Real estate rewards time in the market, not trying to time the market.
Even if mortgage rates drop slightly in the future, rising home prices could cancel out any savings. And if rates don’t fall as expected? You’ve just waited for no reason.
What Sellers Should Know
If you’re selling your home, waiting for more certainty in the economy might feel safer. But buyer activity often picks up when rates fall, giving you more eyes on your listing and potentially more competitive offers. Plus, with inventory still low in many markets, your home could stand out more now than if everyone decides to sell later.
Bottom Line
If you're waiting for a recession to buy or sell, it's important to understand what really happens during one. While lower mortgage rates are possible, a big drop in home prices is far less likely. In most cases, waiting could mean missing out on building equity, locking in today's prices, or taking advantage of a less competitive market.
Instead of trying to time the market perfectly, make a move that aligns with your goals and financial situation. A knowledgeable real estate professional can help you understand your options and craft a strategy that works, regardless of what the headlines say.
Ready to Make Your Move?
Whether you’re looking to buy your first home, sell your current one, or invest in Arizona real estate, Alejandra Paladino is here to guide you every step of the way. As a top REALTOR® with eXp Realty, Alejandra brings market expertise, negotiation skills, and a passion for helping clients win in any market.
Reach out today to create a plan that works for you.
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Alejandra Paladino – Arizona Real Estate Expert | New Construction & Relocation Specialist | Host of "The American Dream"