Since the 2008 housing bubble popped, the mere mention of the word “recession” is enough to cause homeowners and others to shiver. And at present, high inflation, rising interest rates, and high gas prices are all indicating that 2023 isn’t going to be the best year.
So if you’re a homeowner, a property investor, or someone who’s looking to be a homeowner, you should know what the housing market is like in a recession. That’s exactly what we discuss in the sections below.
What Is A Recession?
A severe, pervasive, and long-lasting drop in economic activity is referred to as a recession. Although experts define recession differently, the classic definition of a recession is two consecutive quarters of negative gross domestic product (GDP) growth.
Are We About To Enter A Recession?
First things first: Will there actually be a recession? According to some economists, the likelihood of a worldwide recession is as high as 98%. Major layoffs have already started to occur, especially in the IT sector. Even the largest businesses, including Meta, Twitter, and Amazon have announced major layoffs in 2022.
What Usually Happens To Housing During A Recession?
1. During Recessions, Mortgage Rates Typically Decrease
The impact of a recession on mortgage rates can be better understood using historical data. Taking into account the last five recessions, mortgage rates fell by an average of 1.8 percentage points.
2. A Slowdown And Price Decline In The Housing Market
Sure, a recession hits pretty much the whole economy, but what happens to property prices when one occurs? Mortgage defaults brought on by unemployment go up, along with the number of available homes and foreclosures. Similarly, fewer people are interested in taking out a mortgage because the economic outlook is uncertain. Higher rates are also unattractive at this time. Therefore, a slowdown in the housing market and a drop in prices are both possible. But every market and every recession is different—history only can tell us so much!
3. Trouble Selling Your Old House
During a recession, selling your home can be tough; even if you’re selling to purchase a new home, you may have some difficulty. You could receive less money than you expected, or your house might sit on the market longer than you planned for. If you’re thinking “I need to sell my house fast,” then it’s probably in your best interest to act quickly.
Avoid Hassles When Selling Midst A Recession
Do you now feel better equipped to handle the housing market during a recession? Or has all this info made you realize you want out now? Selling your house to cash home buyers is a good option, especially if you want to sell your home quickly in as-is condition. At Barrington Acquisitions, we buy houses in Atlanta, GA, Charleston, SC, and Columbia, SC! Our process is short, smooth, and simple.