April 29, 2025
There’s been a lot of noise around President Trump’s tariff announcements, but here’s what really has real estate pros and buyers watching closely: the growing fear of a recession.
Markets have been rattled. Since April 2, the S&P 500 dropped over 12%, wiping out more than $10 trillion in market value. That kind of selloff doesn’t just stay on Wall Street—it shakes confidence in big financial decisions, like buying a home.
According to JPMorgan Chase and Moody’s, we’re now looking at a 60% chance of a global recession. Even Trump’s biggest financial supporters are urging a pause. If the economy does tip into recession, here’s what that could mean for the housing market.
Historically, recessions bring layoffs and higher unemployment. That translates to buyers hitting the brakes and sellers adjusting expectations.
Home sales are already at their lowest since 1995, and with less buyer competition, homes could sit longer on the market and price growth would likely slow down—or even decline slightly.
But this time around, most homeowners are sitting on fixed-rate mortgages under 4%. They’re not in a rush to sell, and many have strong equity positions. Even a 20% dip in home prices wouldn’t wipe out the gains most owners made over the last few years. So yes, prices might cool, but it’s not a crash situation.
Inventory is stacking up in the South and West, nearing pre-pandemic levels. But in the Northeast and Midwest? Inventory is still down by nearly half. If a recession hits, we’ll probably see prices drop faster in oversupplied markets like Texas and Arizona, while places like NYC, Boston, and Chicago could hold a bit steadier.
Here’s one silver lining: mortgage rates often dip during a recession. Investors flock to bonds, and that pulls down Treasury yields, which mortgage rates tend to follow. We already saw a dip in long-term yields last week. If a downturn pushes the Fed to loosen up, we might see more favorable borrowing costs.
Still, lower rates don’t always mean more buyers. If job security becomes uncertain, even a great interest rate won’t be enough to convince buyers to make a move.
If you’re thinking about buying, get real about your finances. Don’t stretch your budget. Make sure that mortgage is something you can comfortably afford—even if things tighten up.
Also, make sure that emergency fund is strong. You want to enter any home purchase with enough savings to weather at least a few months of uncertainty, just in case.
And if you’re on the fence? Renting might make more sense in the short term. It gives you flexibility and keeps your cash accessible if the market shifts further.
A recession wouldn’t be great news, but for real estate, it might just mean more of what we’ve already been seeing—soft prices, cautious buyers, and long-standing inventory issues in certain markets.
If anything, it could create more opportunities for well-prepared buyers to negotiate and lock in favorable rates. The key is to stay informed, stay liquid, and never overextend.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
