What an Economic Slowdown Could Mean for the Housing Market

Lately, it feels like every headline mentions the economy, and you may be hearing more talk about a possible recession this year. Understandably, that’s leaving a lot of people wondering: What would that mean for the housing market – and my plans to buy or sell?

Here’s the good news: history gives us some helpful clues.

A Recession Doesn’t Automatically Mean Falling Home Prices

Many people assume that if we head into a recession, home prices will tumble like they did in 2008. But here’s the truth – that downturn was an outlier, not the norm. In fact, in four of the last six U.S. recessions, home prices actually went up, not down.

That’s because today’s market is fundamentally different from what we saw back then. Inventory is still tight, even as more homes come to market in some areas, and demand from buyers remains steady. According to data from Cotality (formerly CoreLogic), most past recessions saw home prices hold steady or even increase (see chart above).

So, while a slowdown in the economy could cool the pace of price appreciation, a widespread drop in home values isn’t what the data points to.

Mortgage Rates Often Fall During Recessions

Here’s another encouraging trend: mortgage rates typically drop during recessions. Looking at the last six U.S. recessions, rates declined each time, sometimes quite dramatically.

That’s worth keeping in mind if you’ve been feeling priced out or waiting for a better financing window. While we’re not likely to return to the record-low 3% rates of recent years, any drop in rates can improve your buying power and make a meaningful difference on monthly payments.

What This Means for Williamsburg Homeowners and Buyers

If you’re in the Williamsburg, Virginia market, you’re already in one of the most resilient and desirable regions on the East Coast. Our local real estate market continues to benefit from historic charm, great schools, recreational opportunities, and a steady influx of out-of-state buyers. Even during national economic shifts, Williamsburg’s housing market has often remained stable and attractive.

Whether you’re considering a move, investing in a second home, or just keeping an eye on your home’s value, remember: a recession doesn’t automatically spell bad news for real estate.

Bottom Line

While no one can predict the future with certainty, history shows us that housing typically weathers economic slowdowns better than people expect – and in many cases, home prices keep moving forward.

If you’re wondering how the national conversation is shaping our Williamsburg market, let’s connect. I’m happy to walk you through the latest local data and help you make a smart, confident plan.