Editor’s note: All of HomeLight’s coronavirus information for buyers, sellers, and agents is available on our COVID-19 hub. As the economy slowly reopens and we begin to assess the damage caused by COVID-19, everyone is watching the numbers. A record 20.5 million Americans lost their jobs in April, the stock market plummeted more than 20% in mid-March, and as of May 11, the government had sent out $218 billion in stimulus checks. But if you’re a homeowner, particularly one who had been planning to sell, you’re no doubt keeping a close eye on home prices. And you’re likely wondering if you should hurry up and sell before a recession hits — or hold off until some semblance of normalcy has returned. As with most decisions in real estate, the answer won’t be the same for everyone, and there are a lot of factors to take into account. These days, you can’t turn on the TV or click on a news website without coming across the spooky “R-word” — recession. Many analysts believe a recession is on the way, and some claim we’re already in the midst of one. It’s normal for the economy to expand and contract over an extended period of time. Whether caused by a pandemic or a mortgage crisis, the contractions (recessions) can wreak financial havoc, often causing businesses to shut down, unemployment to spike and investment portfolios to plummet. But they’re temporary — it might take a matter of months or years, but ultimately the economy will begin another expansion. The National Bureau of Economic Research (NBER) is the entity that officially declares when a recession is in effect. The NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.” It remains to be seen when or if the organization will declare that the economy is officially in a recession in the wake of COVID-19. The sweeping effects of a recession impact every aspect of the economy, including home prices. But the impact may manifest differently across various real estate markets. Top-selling real estate agent Joanne McCoy says that so far, her Lincoln, Nebraska market has been relatively sheltered from the effects. “We haven’t experienced the dramatic price drops seen on the coasts or bigger markets,” she notes. “We might see a 3% to 5% drop, where in good years, we might see an appreciation of 5% to 10%.” McCoy doesn’t believe the coronavirus crisis will cause a widespread housing crash. Even during periods of economic uncertainty, she predicts people will continue to seek out the benefits of homeownership. Kevin Kendrick, a top agent in Orlando, Florida, has seen a slowdown in the market, but not a significant dip in listings. “People are still buying and selling homes,” he says. “We’ve seen more of a reduction in physical showings than a reduction in offers.” According to some reports, home prices have actually increased during the crisis, amid a shrinking supply of homes and a drop in sales. According to the National Association of Realtors (NAR), the average home price increased by 8% from last year, reaching $280,600 as of March. However, Jordan Shanbrom, finance expert and life insurance specialist, notes that with such a large number of people being unemployed or having their wages reduced, there will likely be a dip in the number of qualified loans to buy homes, which may hurt buyer demand — and without demand, home prices will drop. “Along with this, we also have the issue of the economy being shut down for a long period of time and having major businesses shut down permanently,” Shanbrom notes. “This means a lot of individuals who would have been interested in homeownership may abandon the idea, as they will either need to go get a job or start new businesses. Many will decide to rent during this process, and home purchases will suffer as a result.” But there are glimmers of optimism. A report from First American Financial Services claims that a recession isn’t likely to cause a major housing crash. “The U.S. housing market has weathered all other recessions since 1980,” notes Odeta Kushi, the author of the report. “With the exception of the Great Recession, house price appreciation hardly skipped a beat, and year-over-year existing-home sales growth barely declined in all the other previous recessions in the last 40 years.” If you’ve been considering putting your house on the market, you might be wondering if an impending recession could or should weigh into your decision — and you’re not alone. According to HomeLight’s most recent survey data as of the week of May 13, just over half of real estate agents say business is slower than normal, but that deals are still happening. Nearly a quarter report that they are actually seeing growth in their business, while 20% say their sales have remained about the same as they were before the pandemic. Only 5% reported that their business has come to a standstill. A survey by the National Association of Realtors in April of 2020, 41% reported that sellers are delaying the sale of their homes for a couple of months, and another 7% are deciding not to sell indefinitely. Just over 30% say that sellers are continuing with the sale process, with nearly half of those sellers opting for contactless methods. Owen Dashner, a real estate investor and partner with Red Ladder Property Solutions, says that while home prices overall have not yet been significantly impacted by the pandemic in most markets, a housing market decline is likely coming, and it could be severe once the reality of closed businesses and job losses take hold. So is it best to act quickly and list before prices drop — or should you wait until the economy settles down a bit? The short answer: It depends. As is the case even during an economically stable time, there are many factors to consider when choosing to list your home, and no two situations are the same. The forbearance process allows you to pause your payments and then pick up where you left off after a set period of time. Remember, though, that forbearance is not loan forgiveness. After the forbearance period is wrapped, you’ll need to review your options to pay back what you owe either with a lump sum, repayment plan, or loan modification. With unemployment at record highs, many businesses still shuttered, and a stock market that seems to be on a long-term roller coaster ride, it seems inevitable that the effects of this crisis will ultimately have a ripple effect on the housing market — adding even more weight to already heavy decisions. Ultimately, the choice to sell or hold during such a precarious window of time is an individual one. It’s best to consult with a trusted real estate agent for guidance on the best move for your situation.Signs that a recession is coming
How a recession could impact the housing market
Early signs of resilience
Uncertainty about the future
Should you sell before the recession or hold off?
Reasons you might want to sell now
Reasons you might want to delay selling
The final word