6 things you need to know about mortgage rates and housing prices in recession

The economy is everywhere. Inflation may be cooling but increasing tariffs., Stock Markets Comparison and global uncertainty are Maintain all on the edgeS As the mortgage rates jump around, home buyers ask me: Will the homes become more affordable in a recession?

After more than 20 years in real estateI saw my share of ups and downs, from times of boom to complete catastrophes, like 2008. The truth is that there is Always For certain home buyers, even in a decline. The market does not stop during a recession. It just shifts. And if you are financially done, this change can actually Work in your favorS

Let’s look at what a recession really means mortgage ratesWhether housing prices will fall and when is the right moment Buy a homeS

The risks of recession are real

There is a lot of recession warning signs Right now. The dismissals are recruiting, GDP slows down and the users’ confidence has decreased. Paychecks do not go far, and the pension accounts take strikes.

Although less available income and tougher budgets indicate a general delay in the economy, we are still not in a recession yet. Two consecutive fourths of negative GDP growth will be needed to achieve this definition. But for many people this Already feels like oneS

Even if inflation does not increase, the cost of daily goods and services is still high and Budgets are stuckS When people feel the squeeze every time they fry a card in the grocery store, it shapes how they think to make huge purchases like a home.

Interest reduction is not inevitable

The cost of borrowing is expensive in the last few years, which has made households and businesses cautious of borrowing. The Federal Reserve is likely to Again reduce interest rates Later this year, ultimately funding makes funding cheaper.

But these abbreviations probably won’t come to the summer. The Fed is a little stuck at the moment. The losing steam and the inflation of the economy is cooling, but it is not fast enough. The central bank is cautious of a shift of politics, especially the tariffs moving prices.

Although the lower interest rates will eventually affect the home market, the Fed does not directly control the mortgage rates. Mortgage rates Move on many factors, such as the bond market and investor expectations. Even when the Fed begins to reduce the rates again, do not expect the mortgage rates to Drop like crazyS Many of these expected abbreviations are already priced at the market.

Mortgage rates will not drop significantly

Mortgage rates often fall during economic depression, as we have seen recently in 2020 and earlier in 2008. Lower rates help to raise the economy, and the Fed knows this.

But this time, things are softer around. There is instability everywhere. Although tariffs can fall, they can also shoot with any good economic news. Like many experts in the real estate industry, I think an average Prices for a 30-year fixed mortgage Will run between 6.5% to 7.25% During the bigger part of 2025With weekly jumps and declines in this range.

If you hold on to 4% or 5% mortgage ratesYou can wait longer than you would like. It will take a lot more negative economic news to see the percentages significantly.

Also worth noting that Your personal financial situation matters more than your interest rate. If you have a solid flow of income and a long -term plan to pay a home loan, waiting for a perfect rate may not be worth it.

Housing prices are unlikely to bounce

After years of stable growth, housing prices can hypothetically collapse if the balloon bursts. But in today’s housing market, real estate prices are unlikely to decrease in a great way.

Historically, housing prices Don’t actually fall much during recessionsS The 2008 housing accident was an exception, not a rule. What we will probably see is a more slow assessment or the small downturns in certain markets, especially in areas affected by Higher insurance expensesTaxes or natural disasters (Florida, Texas and Louisiana come to mind). We could see that housing prices fall in some parts of the country when supply increased.

But all over the country, we are still Dealing with low inventoryS While this changes, it is difficult to see that prices are decreasing dramatically. Plus, given the high cost of construction and labor, it is clear that housing prices are not abandoned soon.

It is not always more cheaper to wait

If you are financially stable, it may be more cheap to buy a home in a recession. You can find better offers, less competition and more powerful power of negotiationsS But if the lending is tightened, getting a loan can become more difficult. This is something we already start seeing apartments and certain types of propertiesS

There is also the “effect of wealth”. When people feel more affluent, such as when the portfolio of their shares or the value of the home grows, they are more confident that they make large purchases. But when these numbers start to slide or there is even a threat of uncertainty of work, even if nothing changes day by day, people pull back. Economic turbulence affects buyers’ activities in a big way. If someone just lost $ 20,000 in their 401 (k) they are not in a hurry Get a new mortgageS

There is no perfect time to buy

Thehe The best time to buy a home Well, when it makes sense to you. If you have a stable income and credentialsAnd you are ready to establish yourself, an economic decline in the housing market can actually work in your favor.

Just don’t wait for some magical “perfect time” to take out a mortgage. The green light most people wait does not existS If you prepare, be informed and work with the right team, you can make an intelligent move, no matter what the economy does.