What a Recession Could Mean for Real Estate

The real estate market isn’t likely to be at the forefront of the next recession, but it will still be affected by one, Realtor.com reports.

Aspiring buyers hoping that home prices will crash, like they did during the Great Recession, are likely in for a rude awakening. There simply aren't enough homes being built to satisfy the hordes of buyers. And with more members of the giant millennial generation wanting single-family homes in which to raise their growing families, there isn't likely to be a drop-off in demand anytime soon.

But the anticipation of a recession in itself could make the housing shortage even worse. Worried would-be sellers may decide to postpone listing until they can get top dollar for their properties.

A recession could make builders even more reluctant to break ground on new residences, particularly in the priciest markets on the coasts.

A year ago, about 10% of single-family home builders offered buyers incentives such as discounts to go under contract, says National Association of Home Builders Chief Economist Robert Dietz. Today, about 40% are turning to incentives to spur home sales. That's not a good sign.

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