Experts are warning that we are heading towards a recession, Let’s understand how will it affect your home value?

A recession is a slowdown or a contraction in economic activities. When we mention economic activities we are talking about an aggregate that might include but is not limited to production, employment, trading, and others. A recession is a tipping point in the business cycle when ongoing growth peaks, reverses and becomes an ongoing economic recession.

In this interconnected world, one sector’s slow-down may have some effect on the other sectors. To say that, home prices are insular to other sectors might not hold but home prices may not have a linear relationship with the recession. Home prices generally don’t fluctuate haphazardly like other commodities, they are steady.

Home as an asset class stands on a different footing. People generally don’t want to let it go, they generally don’t want to trade homes as a commodity, there is some emotion involved and that element of emotion sets homes apart as an asset class.

Homes may not be recession-proof fully but they are recession-resistant for sure and that is one thing that every homeowner must know. There have been six recessions in this country over the past four decades. Out of which home prices appreciated four times and depreciated only two times. Thus, home prices don’t fall every time there is a recession.

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