What are the Potential Upsides to a Recession?

While most Americans aren’t rooting for a recession, there would be some silver linings.

Typically, when the U.S. economy is struggling, the Fed will cut interest rates to stimulate the economy and incentivize companies to expand and hire again. Mortgage rates, which are separate from the Fed’s rates, usually follow in a similar trajectory. So if the Fed cuts rates again like it did during the pandemic, mortgage rates would be expected to fall.

Lower rates could make purchasing a home more affordable for buyers who have been priced out of the market. It could also light a fire under homeowners who might be tempted to list their homes and purchase new ones. That could help to increase the nation’s very limited housing supply.

Home prices could also come down if fewer buyers can afford to purchase properties. That would be a boon to those with more secure jobs who have been waiting for the right opportunity to get into the market.

But then we would have to live through another recession.