How inflation and the coming recession will impact the housing market.

Two depressing words have been thrown around a lot recently: recession and inflation. Despite how anxious these topics might make you, we have to keep an eye on them and talk about how they could affect the upcoming real estate market. After all, they may affect how you and your family approach real estate over the next year.

Let’s cover what a recession would mean first. History has shown us that a recession doesn’t always mean a housing crisis. The graph at 0:53 shows how home prices changed during the last six recessions. During four of those recent recessions, home prices appreciated. They only fell during two, slightly in 1991 and drastically in 2008.

“Owning a home is a great hedge against inflation, even during a recession. ”

Keep in mind that our market is nothing like the one we had in 2008. That market was driven by poor lending practices. Today people have plenty of equity, many have bought their homes with cash, and more homeowners have fixed loans with low interest rates. Even if prices dropped 20%, it wouldn’t affect today’s homeowners like it did in 2008. 

Don’t put your buying plans aside because of inflation either. Owning a home has always been a good idea when there’s high inflation. If you have cash, you need to put it somewhere right now, but the stock market and crypto are both taking a beating. Housing has always appreciated in value, and that makes it a great hedge against inflation. 

Having a fixed mortgage will also help stabilize your costs. Property taxes and maintenance costs will go up with inflation, but your main monthly payment will remain the same, which is not the case if you’re renting. Rents increase during inflation, especially in this type of market where not as many people are buying. 

Hopefully, talks about inflation and a recession are less scary for you now. If you have any questions, feel free to call or email us. We’d love to help.