{"id":66598,"date":"2019-09-06T04:29:36","date_gmt":"2019-09-06T11:29:36","guid":{"rendered":"https:\/\/redfindevelop.wpengine.com\/blog\/?p=66598"},"modified":"2020-10-06T17:07:59","modified_gmt":"2020-10-07T00:07:59","slug":"next-recession-housing-market","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/next-recession-housing-market\/","title":{"rendered":"Rochester, Buffalo and Hartford Least at Risk of a Housing Downturn in the Next Recession"},"content":{"rendered":"

It won\u2019t be a repeat of 2008, but housing markets in some parts of the country are at more risk than others<\/h2>\n

Whether it happens this year, next year, or in 10 years, another recession is inevitable. Regardless of when it comes, it\u2019s unlikely to have a large negative impact on the US real estate market<\/a>. However, there are some metro areas that are more at risk of a housing downturn than others. Riverside, Phoenix and Miami have the highest risk of a housing downturn in the next recession, while Rochester, Buffalo and Hartford have the lowest risk.
\nWith the Great Recession still fresh in Americans\u2019 memories, the idea of a housing crash is psychologically linked with an economic recession for many people today. But historically that usually hasn\u2019t been the case.
\nSince 1980, there have been five official recessions in the United States. In all but the 2007-2009 Great Recession, inflation-adjusted home prices only declined an average of 2.7 percent from the month before the recession began to the final month of the recession, according to the home price index data from Robert Shiller<\/a>.
\n\"Shiller<\/p>\n\n\n\n\n\n\n\n\n\n
Recession Start<\/th>\nRecession End<\/th>\nDuration<\/th>\nReal Home Price Change<\/th>\nPeak Unemployment<\/th>\n<\/tr>\n<\/thead>\n
1980-01<\/td>\n1980-07<\/td>\n7 months<\/td>\n-2.6%<\/td>\n7.8%<\/td>\n<\/tr>\n
1981-07<\/td>\n1982-11<\/td>\n17 months<\/td>\n-5.8%<\/td>\n10.8%<\/td>\n<\/tr>\n
1990-07<\/td>\n1991-03<\/td>\n9 months<\/td>\n-6.7%<\/td>\n7.8%<\/td>\n<\/tr>\n
2001-03<\/td>\n2001-11<\/td>\n8 months<\/td>\n+4.4%<\/td>\n6.3%<\/td>\n<\/tr>\n
2007-12<\/td>\n2009-06<\/td>\n19 months<\/td>\n-16.7%<\/td>\n10.0%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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.
\n\u201cHome prices are high right now, but they\u2019re high because there\u2019s not enough supply to meet demand, which means there\u2019s not a bubble at risk of bursting,\u201d said Redfin chief economist Daryl Fairweather<\/a>. \u201cMost of today\u2019s 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.\u201d
\nFairweather continued, \u201cIf the U.S. enters a recession in the next two years, it will likely be caused by the global trade war. U.S. industries that rely on exports, like the automotive industry and the agricultural industry, would be the most vulnerable and susceptible to layoffs. Homeowners who are laid off may not be able to continue covering their monthly mortgage payment and may be forced to sell their homes. And would-be homebuyers won\u2019t feel so confident about making a big purchase when they don\u2019t feel confident about their job security or their financial wellbeing. That could cause declines in home prices in markets whose economy depends on global trade, but home prices nationwide are likely to hold steady.\u201d
\nWhatever does end up causing the next recession, housing markets in certain metro areas are at greater risk of negative impacts like declining prices and a glut of homes for sale. To identify the local housing markets most likely to feel adverse effects from the next recession, we looked at the following factors:<\/p>\n