As we've all seen, recession talk is increasing in the news, and the odds of a recession are rising this year. Many of our clients are curious to learn what this would mean for the Lamorinda housing market. 

The best way to advise you is to look at the historical data from the past 40+ years to understand what typically happens during recessions. 

A Recession Doesn't Mean Home Prices Will Fall 

According to CoreLogic, in four of the last six recessions, home prices actually increased. The 2008 housing crisis was an exception, not the rule, as it's the only time we've seen such a significant drop in prices.

The bottom line, home prices typically follow whatever trajectory they're already on during a recession. Currently, home prices are rising at a more moderate, sustainable pace and there's no historical precedent suggesting a recession would automatically change that direction. 

Mortgage Rates Typically Fall During Recessions

While home prices tend to maintain their current path during economic slowdowns, mortgage rates have consistently declined during recessions. Looking at data from all six recessions since 1980, mortgage rates fell each time.

This creates an interesting dynamic for buyers. While a recession might introduce some economic uncertainty, the corresponding drop in mortgage rates can actually improve affordability. However, it's important to set realistic expectations, as we shouldn't anticipate rates returning to the 3% range we saw during the pandemic. 

My Perspective After 20 Years in Real Estate

Having guided thousands of clients through multiple economic cycles over the past two decades, the Dana Green Team has seen firsthand that real estate decisions should be based on personal circumstances rather than trying to time the market. 

The right time to buy or sell depends on your specific situation, needs, and long-term goals. Don’t let the headlines about economic forecasts distract you. As always, we are on standby to help guide you through the noise and process.