Recessions are a horrible economic event that leaves homeowners and buyers very confused. Recessions occur because of rising unemployment rates and the GDP falling. Usually, during recessions, house prices take a nosedive and decrease drastically. This results in a general decrease in potential buyers.

In American history, there have been about 47 different recession periods. Although these recessions have not all affected the housing market, there was still economic downfall in each one.

House Prices Decrease

While this may sound great, it is actually very harmful. When a recession takes place, hard working Americans lose their jobs. Without long term employment, Americans are forced to take jobs with limited benefits. One of the roughest recessions occurred during 2008 and we are still recovering from it. It was harsh and rough to get out of. Thousands of Americans got laid off, and property prices lost their value quickly during the recession. Although prices went down, buyers were reluctant but still bought homes. According to, Aaron Terrazas, Zillow’s director of economic research, “People’s incomes get squeezed [in a downturn], but they still need a place to live,”.

Will there be another recession?

Real estate and economics change through a cycle. While we have rapidly gotten better after 2008, there is always a chance we may go through another drastic recession. Countless economists predict that while a recession is possible, the likeliness the housing market will be affected is slim.

Reinforcement for the housing market against a recession

Because of strictness increasing within banks and the housing market, the potential of the housing market decreasing in value is low. Banks now have harder security for accessing mortgage lending and loans. The Dodd-Frank legislation was passed after the recession in 2008. This legislation allowed the government more control over loans. Government-sponsored mortgage facilitators Fannie Mae and Freddie Mac receive many of their loans from other mortgage lending companies. This reinforces the housing market against a recession.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.

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