How will a recession affect the housing market?

A recession is defined by 2 consecutive quarters of negative GDP. They are characterized by high unemployment/layoffs, inflation, defaults on payments, and less consumer spending. Some economists say we are already in a recession. Since GDP for Q2 hasn't been "announced"yet, we won't know until the end of August.

* Just for reference:

GDP for Q4 of 2021 was +6.9%.

GDP for Q1 of 2022 was -1.6%.

There have been 19 recessions in U.S. history, and unfortunately/fortunately, they are natural and important part of a business cycle. While natural and important, we all still feel the pain. They say inflation is the "silent killer", but in times of recessions, its not so silent!

After the hottest real estate market of our time, you might be wondering, how is this impending recession going to affect the housing market moving forward?

Most economists will say that a recession will help level out the market to pre-pandemic conditions. Before the pandemic, the national average of home price appreciation was around 3%-4% a year. This means in a normal year, your house will increase in value by 3%-4%. Last year alone, Florida saw home prices increase by an average of 17.7%.

Recessions do not equal housing crisis! In the last 6 recessions, we saw an increase in house prices in all but 2 recessions! And of course, the reason for the 2008 housing crisis was due to very loose lending laws which simply do not exist today.

This being said, it might be your time to get into the market, and with less competition! Home prices are projected to rise another 6-9% through the rest of 2022, and then level out to the normal 3%-4% in 2023.

Plus, real estate investing is the best way to get ahead of inflation!