New Money

 "The Bay Area's 'new money' comes almost entirely from tech, while New York's 'old money' comes from more varied sources such as media, real estate, finance, etc.," says Jones. "The Bay also boasts access to bright college grads from Stanford and Berkeley, which only bolsters the area as a hub for talent, innovation, and access to capital."

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“Regions with more home supply, such as the South, would likely see home prices fall more quickly in a recession as buyer demand pales in comparison to already ample home supply,” says Jones. “Under-supplied areas, such as the Northeast, could see prices hover longer before falling, as the pullback in demand actually allows for more balance in the market.”

Although a severe recession can force some homeowners into selling because they are no longer able to afford their mortgages, most current homeowners (54%) have a mortgage with a rate below 4% and are relatively well-equipped to make their housing payments, says Jones.

Homebuilders, who are already facing cost pressure from tariffs, would likely pull back sharply on new construction in a recession, exacerbating the existing housing supply gap.

Recessions are typically marked by a slowdown in hiring, an increase in layoffs, and a rising unemployment rate. However, a recession is not the same thing as a stock market crash—although a steep enough decline in the market can trigger a real economic slowdown.

Although recession fears are rising, it is not a guaranteed outcome. Trump has insisted that his plan will boost the U.S. economy, and he may strike beneficial deals with key trading partners, reducing the economic fallout from his tariff scheme.

Mortgage rates typically fall during a recession as investors shift their money from bonds for reliable returns as they ride out uncertainty. 

This drives up bond prices, lowering yields. Mortgage rates tend to follow the yields on 10-year Treasury bonds.

This effect was in evidence late last week, as long-term yields plunged below 4% during a selling panic in stock markets. Daily mortgage rates briefly dropped to their lowest of the year, before bond yields and mortgage rates rose back higher this week.

An economic downturn would also prompt the Federal Reserve to loosen monetary policy, resulting in lower borrowing costs. Although Fed policy primarily affects short-term borrowing costs, it indirectly influences long-term interest rates as well.