Every Homeowner Needs To Know This One Thing About Recession

Dated: May 18 2022

Views: 7

The One Thing Every Homeowner Needs To Know About a Recession

The One Thing Every Homeowner Needs To Know About a Recession | MyKCM

A recession does not equal a housing crisis. That’s the one thing that every homeowner today needs to know. Everywhere you look, experts are warning we could be heading toward a recession, and if true, an economic slowdown doesn’t mean homes will lose value.

The National Bureau of Economic Research (NBER) defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

To help show that home prices don’t fall every time there’s a recession, take a look at the historical data. There have been six recessions in this country over the past four decades. As the graph below shows, looking at the recessions going all the way back to the 1980s, home prices appreciated four times and depreciated only two times. So, historically, there’s proof that when the economy slows down, it doesn’t mean home values will fall or depreciate.

The One Thing Every Homeowner Needs To Know About a Recession | MyKCM

The first occasion on the graph when home values depreciated was in the early 1990s when home prices dropped by less than 2%. It happened again during the housing crisis in 2008 when home values declined by almost 20%. Most people vividly remember the housing crisis in 2008 and think if we were to fall into a recession that we’d repeat what happened then. But this housing market isn’t a bubble that’s about to burst. The fundamentals are very different today than they were in 2008. So, we shouldn’t assume we’re heading down the same path.

Bottom Line

We’re not in a recession in this country, but if one is coming, it doesn’t mean homes will lose value. History proves a recession doesn’t equal a housing crisis.

Blog author image

Jason Shafor

Jason is a born and raised Flagstaff native. He has over 15 years of home building experience in Northern Arizona. Jason takes the same blue collar, hard working habits he developed and implements the....

Latest Blog Posts

You Can Now Own a Home with Down Payment Assistance Programs

Homeownership Could Be in Reach with Down Payment Assistance ProgramsA recent survey from Bankrate asks prospective buyers to identify the biggest obstacles in their homebuying

Read More

Homebuyers: This is Your Key Opportunity

A Key Opportunity for HomebuyersThere’s no denying the housing market has delivered a fair share of challenges to homebuyers over the past two years. Two of the biggest hurdles homebuyers

Read More

Today’s Housing Market Has Two Reasons Why It Isn’t a Bubble

Two Reasons Why Today’s Housing Market Isn’t a BubbleYou may be reading headlines and hearing talk about a potential housing bubble or a crash, but it’s important to understand

Read More

You Need an Agent When Pricing Your House

Why an Agent Is Essential When Pricing Your House [INFOGRAPHIC]Some HighlightsWhen it comes to pricing your house, there’s a lot to consider. The only way to ensure you price it right is

Read More