The Housing Shortage Paradox: Why a Recession Might Not Lower Home Prices

Some prospective home buyers are hoping for a recession to make housing more affordable, but economists warn this strategy may backfire.

Unless there are widespread job losses, home prices aren’t likely to fall significantly due to the persistent housing shortage and homeowners’ reluctance to give up their low pandemic-era mortgage rates.

Even during a recession, with supply continuing to lag behind demand, prices could actually increase depending on the recession’s severity.

While 36% of respondents in a December LendingTree survey said they wanted the housing market to crash, economists point out that the housing market dynamics today differ significantly from previous recessions.