How Will the Next Recession Affect the Housing Market?

If potential homebuyers are waiting for home prices to drop drastically during the next Recession, they may be disappointed. On the flip side, however, home industry professionals can breathe a sigh of relief. It’s not that America will never experience another recession, but experts forecast that the housing industry will not be affected in a major way—especially when compared to the Great Recession. However, prudent lending practices and avoiding overproduction are still key to keeping the housing market healthy and ensuring that those who buy homes will be able to afford them in the long run. 

It’s unclear when the next recession will come. But a recent report argues that when it does the U.S. housing market is unlikely to adversely affected in any major way.

Researchers at First American Financial Services FAF, -1.81%, a title insurance company, examined how the country’s housing market has fared historically during recessionary periods. Based on what’s happened in past recessions, the report argues that the next recession is unlikely to prompt a major downturn in housing.

“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.”

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