Words like “turmoil” and “uncertainty” rarely describe an environment where people are eager to buy and sell real estate. Unfortunately, right now it is hard to find any analyst, economist or commentator on either side of the political spectrum that isn’t using these words—or some variation, as tariffs have roiled financial markets and consumer confidence plunges to historically low levels.
President Donald Trump announced on social media this afternoon that some tariffs were being delayed, but even as markets rebounded many questions were left unanswered, as Trump also said tariffs on China would remain.
Amid the back and forth, what are the risks—and opportunities—for those who make a living buying and selling homes? Against the possibility of an economic downturn, how should real estate professionals be approaching their business, and how long before the dust settles?
“The whole world looks like things are in chaos, but rates are coming down,” says Bess Freedman, CEO of Brown Harris Stevens, speaking to RISMedia late last week. “I don’t know that people would be comfortable making the biggest investment of their lives in an environment where everything seems like it’s falling apart.”
As investors and policymakers anxiously await lagging data on jobs, home sales and other economic metrics, some business leaders—including Freedman—are saying that some sort of recession is either already here, or on its way based on the ongoing market drop.
“I think that’s probably inevitable,” she says.
Christine Cooper, chief U.S. economist and managing director for CoStar Group, emphasizes just how uncertain the path forward is, and how confidence in the administration’s policy decisions is waning.
“The back and forth, and the up and down and the changes in the policies have really generated a lot of uncertainty. And we’re starting to hear from people that it’s casting a little suggestion that the administration is not behaving with what we would consider a traditional kind of competency,” Cooper says. “It’s just the whiplash of these policy decisions that are creating more uncertainty in the longer term.”
In a market that is either already in a slowdown, or approaching one, the news isn’t necessarily all bad. One of the first dynamics that many in the real estate space pointed out is that mortgage rates are falling, and could fall further based on Fed moves or the 10 Year Treasury yield (which has also been extremely volatile).
“I think that could certainly encourage more buyers into our spring season because there’s improved affordability for them. This gives them a little bit of a boost and opportunity to finally get into the market,” Freedman says.
Lisa Sturtevant, Bright MLS chief economist, has also identified this dynamic. She says it is unclear whether in the short term, rate drops will be enough to offset all the buyers who will sit on the sidelines based on job insecurity or investment losses—something that may affect higher-income consumers, in contrast to recent years.
“We were seeing more moderate income households be a little bit more cautious earlier this year as there has started to be some risks in the economy, but now with the stock market falling as much as it has, we’re starting to see a lot more pullback among higher-income households,” she says.
Maybe most importantly, Sturtevant, Cooper and Freedman separately agree that the current uncertainty won’t be fading anytime soon, even if the Trump administration pulls tariffs or strikes deals.
Freedman, while saying she understands that the tariffs are part of a “reset” that necessarily will bring some “bruising,” acknowledges the execution of the tariffs (including a previous last-minute change of course on tariffs) has created issues.
“What it does is it sort of whittles away at trust. Trust is something you build on and grow by doing steps in the right direction. But when every time it’s this back and forth, it sort of deteriorates the trust,” Freedman says.
“I feel like we are going to be in this world of uncertainty for the foreseeable future,” Sturtevant says. “It’s that unpredictability that is, I think, the biggest concern for folks.”
Kitchen table economics
As agents parse out the pressures on potential clients, and seek to find a way to adjust their business to a potential recession, Freedman offers two potent reminders: one, that every potential buyer or seller has needs and resources regardless of the broader economy. Two, that agents are advisors, and should be listening to people rather than telling them what to do.
“One of the golden rules is that the housing market—whether it’s bull or bear, buyer or seller, up, down, recession, whatever it is—it is there to serve you, not instruct you,” she says. “If you have the money set aside and you want to buy a home and you see opportunity, then we support you.”
Asked if millennials—who made up 29% of buyers last year—might behave differently from other generations as they stare down what would be the third major economic crisis of their adult lives, Freedman says she isn’t sure.
“We are seeing that millennials are now committed to the home-buying process, whereas they weren’t in the past, and so it’s really hard to say,” she says.
Sturtevant says from an economic standpoint, it is harder to point to any demographic that is going to be shielded from a crisis, after higher-income families were generally more able to navigate previous market shifts (particularly when rates rose in 2022).
“What I’ll say is folks who do have security in their own economic situations, they are going to find more inventory out there, more room to negotiate and lower rates,” she predicts.
Cooper sees a potential recession or slowdown as relatively less burdensome to the average household due to the strength of the economy leading into the sudden lurch from tariffs (and other federal initiatives).
“Household balance sheets are really strong except for the lower-income cohort. Businesses were doing well, business investment was strong,” she says. “Households are still doing fine now. They choose not to spend, and that’s what will be recessionary. Just like a business stops investing.”
Those lowest-income households are often older, have health issues and are heavily burdened by housing costs—and are at increasing risk of becoming homeless.
More broadly, Sturtevant says she expects a freeze more than a crash if the country enters a recession, with people putting life events (like having children or getting married) on hold.
Also notable is that existing-home sales are already extremely low—4.06 million in 2024. In 2009, existing-home sales fell to 4.34 million from about 5.3 million at the height of the housing bubble. New-home sales fell about 26% in the same time period, and the market just doesn’t have that far to fall, according to Sturtevant.
“There will be a reduction in demand for both rental and for sale housing if there’s an economic downturn. It’s hard for me to see a scenario where it is anything like what we saw in 2008, 2009,” she says.
Cooper mostly agrees—that a consumer pullback causing a recession is “a little easier to manage” compared to other historic recession triggers.
But she adds that a potentially bigger, unique issue is that inflation is still a problem, meaning the government has “less room” to mitigate a recession with spending.
“It’s more difficult for the Federal Reserve to cut rates and goose the economy a little bit,” Cooper says.
A bear market or a recession, while certainly weighing on real estate in both the long- and short-term, could eventually “get the housing market moving,” according to Freedman, but that is mostly in the longer term if prices dip and more existing inventory comes on the market. She points out that first-time buyers are older and poorer, but that a reset would “benefit everyone.”
“People can’t afford to buy a home anymore, and that’s a real problem in the United States,” she says.
A bumpy road
What else can real estate professionals expect to see heading into more economic turmoil? Sturtevant points out that the industry has already seen historic upheaval, but adds that she hasn’t yet dove into that analysis.
“I’m thinking of the private listing networks and the mergers of big firms, and so I’m not sure I know the answer to that, but it’s certainly something that I think we’re going to pay attention to,” she says.
Brokerages like Compass, or other real estate startups backed by Wall Street, could be more vulnerable, Sturtevant says. And private listing services in particular might be less viable in a housing market that is tipping toward buyers, and broadly slowing, she adds.
In the very short term, the question of whether rates will fall enough—or stay down long enough—to boost an anemic spring market is also unclear, although Sturtevant is a little more optimistic on that front, pointing out that in the past, buyers have been quick to respond to changes in rates.
“The thing that I am watching most closely is how consumers, you and me and families and individuals, are responding to a lot of the news,” she says. “So as you watch the data come in on purchase applications…you can see that opportunistic buyer in the market who jumps in when rates fall one week, and then pulls back when they go up the next week. So I expect that we’ll see more of that.”
Cooper doesn’t see rates falling “meaningfully” though, based on bond yields and the economic big picture. But she adds that a huge drop in consumer confidence isn’t necessarily a reason to panic, either.
“Consumers, they say stuff, but we watch what they do,” she says. “This kind of turbulence that’s happening right now is not good for anybody’s confidence or sentiment, but as long as they’re working, I think we’ll be better off.”
A relatively small increase in unemployment—up 25 or 50 basis points in a short time period as an estimate—could change that quickly, she says, based on traditional economic wisdom. But traditional economic wisdom hasn’t held up recently, she adds, also pointing to federal workforce reductions that have still not hit the economy.
“This is a kind of a shock that is just a little bit more difficult to time out,” she says.
Editor’s note: this story was updated at 1:39 p.m. eastern time with the latest information on tariffs.
