Everywhere you look or everywhere you go, people are talking about a potential recession.If you are a serious buyer or a seller, you are probably wondering should you wait. Should you buy now? What is going on? Rates are up and down, inflation is still high, but the recession is on the horizon.

Here’s a quote that you may want to look at. And this quote is from the Federal Reserve explained in their March meeting 2023. “The staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.” While the recession might be on the horizon, it won’t be one for the housing market record books like the crash in 2008. What we have to remember is that a recession doesn’t always lead to a housing crisis. So it’s really hard to say if we are going to have a recession or not and what will be the impact on the housing market, especially if you’re thinking of buying now or selling now, or you are planning to sell at the end of the year. But what we have to look at is based on the data, based on the historical data, what has happened in the past and what could happen, and how the past numbers, the interest rate, the inflation, the number of homes for sale, the home prices, how did that affect the housing prices? So let’s look at some facts to ease your mind if you’re a buyer or a seller.

Historically, when the economy slows down, it doesn’t mean home values will always fall again. There were six recessions in 1980, 1981, 1991, 2001, and 2008, where the prices dropped only 20%. But we know that’s probably not going to happen again. And in 2020 there was another recession. And out of the six recessions, only two times did the prices drop. So 2008 was a very abnormal recession, so we can pretty much knock it out. So technically, only one time the prices dropped in 1991, and that was only by 2%. And going back to the 2008 recession, which was a huge one, they called it the one in a 100-year recession. It’s totally different than what we have right now in this market as of April, or actually May 2023, we have several things going on. The biggest thing is there’s a big demand for housing.

Renters are tired of paying high rents. People do want to move and buy houses. There’s a huge shortage of inventory. In January 2020, in my CRMLS, the Multiple Listing Service, there were approximately 80,000 homes for sale as of January 2020. As of January 2023, there were only 30,000 homes for sale. So you can see that there’s almost $50,000 less homes in our CRS system. And this is true for nationwide all over the USA. When we talk to agents, when we talk to brokers, when we talk to other experts, we are seeing a shortage of homes like we have never seen before. So as long as demand for buying is there, as long as home prices or homes are there in a short supply, the home prices are not going to fall. Even though the interest rates are 7%. Yes, many of you think interest rates are very high. They were 3%, 2%. We’re not going to go there anytime soon.

In the last 30 years, the average rate has been around six and a half percent. If you go back to the 1980s, interest rates were 12%-18%. Right now they went down to 2%. But if you look at the average norm in the last 30 to 40 years, it has been around six and a half percent. So 7% right now is not too bad at all. And in 2008, comparing to the current housing market, in 2008, we had a lot of bad loans, so a lot of people could not pay their debts. They had a very, very low equity in the homes compared to right now. In the last five years, a lot of homes have a lot of equity. In the 2008 recession, there was hardly any equity in the homes, and there was a surplus supply of homes for sale. So in 2008, there was no demand, there was no equity, and there was tons and tons of homes for sale. Currently no homes and a big demand. So this recession is totally different from the 2008 recession.

The one good thing about recession, any recession, especially this one, and of course inflation is high. And the Feds are trying to control the inflation. And by raising the interest rates, it may create a recession. But when there’s a recession, the rates go down. When the rates go down for a lot of you buyers who have not been able to afford because the rates went up when they went up from 3% and 4% to 6% and 7%, a lot of the buyers got booted out of the buying market. So as the rate will come down and they will come down, everything is up and down. Numbers are meant to go up and down. We just don’t know exactly when they will go up and down. Inflation goes up, inflation comes down, rates go up, rates come down, home prices go up, home prices go down. The only number that does not go down is our age. Mine has gone up and I don’t see it coming down.

Here’s another quote from Bankrate. It explains mortgage rates typically fall during an economic slowdown, and the quote is “During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers.” So again, if you’re a home buyer or a home seller looking to sell and buy another one, or if you’re a first-time home buyer, be assured that if there is a recession, home prices will come down, mortgage rates will come down, homes will be more affordable. So hopefully this will happen sooner than later. So let’s just see what happens. Good luck on your purchase.