Source: Apartment Therapy —
When you hear the phrase “looming recession,” your initial reaction may be to freeze your spending — especially if you’re still haunted by the last economic downturn in which a housing boom and bust led to a subprime mortgage meltdown.
Economists are pretty split on the probability that the U.S. will head into a recession within the next 12 months. But, as The New York Times points out, the Federal Reserve has been aggressively raising rates to tame inflation, which has given way to a drop in home construction and sales and will likely cause consumers to reign in spending and companies to slow hiring and announce layoffs.
Much is at play, and much like you can’t predict the final score of a football game in the first quarter, it’s hard to tell exactly how a potential recession could affect the real estate market.
“A lot of people may assume that when the Fed’s rates go up, mortgage rates go up, but if you look at the last hike, mortgage rates actually went down,” explains Glenn Brunker, president of Ally Home. “There’s no direct correlation so I would not get overly focused on rates and instead look at larger market trends.”
