Home prices hold up better during recessions than stocks or crypto because lending standards tighten, unemployment doesn't spike as fast, and real estate is tied to basic human need. The speaker breaks down why buying a house in a downturn isn't as risky as it sounds.
With the chances of a recession on the rise, there's been more and more headlines from the media lately where they're saying, buyer beware, don't buy a house. Values might drop. So I'm here to set the record straight. So, sure, there might be a better chance of a recession on the rise. However, what happens when a recession happens? Let's unpack it. So in the last 50 years, there's been seven recessions. Six out of the seven times home prices went up. The one outlier was 2008 with the big economic housing collapse, because there was pretty much no lending standards before. Now we have lending standards, qualified buyers get into houses. So that's a learning example that won't happen again. To what really happens when you unpack a recession. Unemployment goes up and the economy has issues. And that makes some more people that can't buy a house because they're unemployed. However, when unemployment goes up every single time, mortgage rates go down. And when that happens, it makes it more affordable for people to buy a house. More buyers come crashing back into the market, more people trying to buy houses means values go up because they have to outbid one another. And also, if you think of houses as an investment, they're quite different than other investments. There's a reason why they're about the safest investments in times of recession. Because unlike stocks or bonds or crypto, when you're falling on hard times, you just pull out your phone and click a button and sell your house. You know, just like you can with stocks and other types of digital investments. With a house, it's a whole process, and that's the roof over your family's head. So even if families fall into tough times, the one investment they'll hold on to is their home, and that keeps value strong.
