During a recession, many aspects of the economy are impacted, including the housing market. While it’s difficult to predict exactly how much houses will drop in value during a recession, historical data can give us an idea of what to expect. In past recessions, the cost of a house fell by an average of 5 percent per year during the downturn. However, the Great Recession was exceptionally damaging to home prices, with a nearly 13 percent drop in average value. It’s worth noting that the drop in home values varied between markets, with the most significant declines occurring in areas like the West and South. Here are some possible factors that can affect how much houses drop in a recession:
Geography/location of the home
Type of home (i.e., single-family vs. multi-family)
Local job market conditions
Interest rates
Level of foreclosures and distressed properties in the area
Growth potential of the area in the future
Ultimately, the severity of the recession, combined with these various factors, should be taken into account when trying to predict how much homes may drop in value. It’s essential to keep in mind that buying a home is a long-term investment, and while there may be short-term fluctuations, history shows that home values tend to increase over time.
![](https://fieldguided.com/wp-content/uploads/2023/05/canva-MADCI4XXLCw.jpg)