Fournier Law Blog

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How Would a Recession Affect the Housing Market?


The stock market has taken some big hits over the past weeks as a result of the global pandemic of COVID-19.  Many Americans are wondering if the next recession is around the corner.  Some may be wondering if the housing market will also see declines that parallel stock market drops.

MarketWatch.com published an article, written by Jacob Passy, that may put real estate owners at ease when it comes to the value of their property. According to the article, experts don’t necessarily believe that a potential recession will significantly impact the housing market.  “While the housing crisis is still fresh on the minds of many, and was the catalyst of the Great Recession, the U.S. housing market has weathered all other recessions since 1980,” wrote Odeta Kushi, deputy chief economist at First American and the report’s author. “In fact, the housing market may actually aid the economy in recovering from the next recession — a role it has traditionally played in previous economic recoveries.”

Nevertheless, homeowners should stay informed and aware of the climate of the economy because different economic factors can have an impact on the housing market.  As we see declines in the stock market, consumers may feel more hesitant to move forward with a home purchase, therefore impacting home sales.  Another economic change that could influence the real estate market are the loss of jobs.  Increased unemployment could, in turn, lead to foreclosures if the homeowner can’t keep up with their mortgage payments.  Foreclosures, according to the article, “can have a ripple effect through a local market, causing other homes to drop in value. “

Read the entire article.