When the next recession occurs, some metro areas, such as Buffalo and Hartford, will have lower risks than others of a housing downturn.
The Great Recession is a major outlier in the relationship between home prices and recessions largely because the overinflated housing market was its major cause. But the housing market, which remains strong, is unlikely to be a culprit or victim of the next recession.
“Home prices are high right now, but they’re high because there’s not enough supply to meet demand, which means there’s not a bubble at risk of bursting,” said Redfin chief economist Daryl Fairweather. “Most of today’s financed homeowners have excellent credit and a cushion of home equity, making them unlikely to default on their mortgage even if their weekly grocery bill grows or their stock portfolio shrinks in the next recession.”
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