The Markets That Can Best Withstand a Recession
September 10, 2019
If the economy turns south, some housing markets will fare better than others. Recession fears are growing, but economists have mixed opinions about whether those concerns will be borne out over the next year or even decade.
Americans are still haunted by the Great Recession, during which home prices nationally sank an average of 16.7% from December 2007 to June 2009, according to Redfin data. However, the dynamics at play in the housing market today are much different. “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,” says Daryl Fairweather, Redfin’s chief economist. “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.”
The metro area with the lowest risk in the event of a real estate downturn is Rochester, N.Y., Redfin’s study notes. The areas with the least risk tend to be in the Northeast and Midwest. “This is due to a number of factors, including more affordable home prices, less investor activity, and local economies that are less prone to volatile boom-bust swings,” according to the study.
“Rochester, Buffalo, and Hartford Least at Risk of a Housing Downturn in the Next Recession,” Redfin (Sept. 6, 2019)
Updated: January 22, 2021