Nearly one-third of homebuyers and sellers expect home prices to increase when the next recession hits, according to a new report from Redfin.
Three months ago, 56 percent of those surveyed by Redfin expected home prices to increase during the next recession. In December, 25 percent of surveyed homebuyers and sellers expected home prices in their area to decline during the next recession; as of March that number has jumped to 44 percent.
“It’s easy to become fearful when it feels like a recession is imminent, but it’s important to remember what has actually happened in past recessions,” Redfin Chief Economist Daryl Fairweather said in a release. “Home prices declined substantially during the Great Recession, which started with a housing crash, but throughout the 2001 recession home prices actually rose due to a nascent housing bubble and a shift in investment dollars from the stock market into real estate.
“It’s perfectly reasonable to expect that a 2020 recession won’t stop home prices from rising, since the supply of homes for sale is so constricted and mortgage rates are at all-time lows,” Fairweather said.
According to the report, 62 percent of respondents under 45 expect home prices to increase during the next recession and just 21 percent expected prices to decline. The share of that group that expects home prices to increase was 31 percent, while the share that expects home prices to decline more than doubled to 47 percent.
“Even though it’s likely that home prices may be insulated during the next recession, it’s a good idea for every homeowner to have an emergency fund in place just in case their home loses value and their income declines simultaneously,” Fairweather said. “Young homeowners who don’t yet have much in the way of savings or equity should especially be thinking through worst-case scenarios.”