Between talk of rising tariff concerns and economists predicting recession odds around 50%, it’s natural to feel a bit uneasy about what 2025 has in store. If you’re like many Americans over 50, your home represents your largest financial asset — years of hard work and savings rolled into one significant investment.
With the right prep, your home can be more than a roof over your head: It can be a buffer or even a source of income. Whether you’re planning for retirement or already enjoying your golden years, there are practical steps you can take right now to protect your home’s value and reduce your financial vulnerability.
From shoring up your emergency fund to making targeted improvements that deliver real returns, let’s explore how you can build a recession-resistant foundation for the years ahead.
How does the economy affect your home’s value?
Your home’s value moves with broader economic forces in ways that can either protect or erode your wealth, depending on where you live and how you’ve positioned yourself.
Job markets play a big role
Local employment is one of the biggest factors in home values during economic downturns. For instance, during the Great Recession, Detroit — a city that depends heavily on the auto industry — experienced major job losses and home foreclosures. Meanwhile Boston, with its diverse economy anchored by universities, health care and finance, saw much smaller declines and a faster recovery.
Interest rates create boom–bust cycles
When the Federal Reserve raises rates to fight inflation, mortgage payments tend to spike and fewer people can afford homes, reducing real estate demand and prices. Even just a 2% rate increase can cut a potential homeowner’s buying power by 20% or more.
Conversely, when rates drop, homebuyers tend to flood back into the real estate market, often creating bidding wars that push values above sustainable levels — exactly what happened during the 2020 to 2022 pandemic boom.
Regional factors can matter more than national ones
Unlike 2008’s broad collapse, today’s risks vary dramatically by real estate market. Areas that saw explosive price gains since 2020 — cities like Boise, Austin and Phoenix, to name a few — face steeper correction risks because prices stretched far beyond local income levels and fundamentals. Meanwhile, metros with more reasonable price-to-income ratios will likely weather any future downturns better since their values haven’t been so artificially inflated.
🔍 Learn more: 5 money moves you shouldn’t make during a recession
6 financial strategies to protect your real estate investment
Your first line of defense against a recession is building financial resilience. These six time-tested money management moves can help you weather any storm that comes your way — now and into the future.
1. Build a robust emergency fund
It’s been said many times, but having at least six months worth of living expenses saved in the event you lose your job is one of the best buffers against economic uncertainty. Plan to have enough cash to cover your mortgage payments, property taxes, insurance and unexpected home repairs for six to 12 months — in addition to everyday living expenses. Store these funds in a high-yield savings account where you can grow your money at the highest rates and access your cash quickly.
“Cash on hand is critical if you’re in a recession,” says debt and bankruptcy attorney Ashley Morgan. “You can always pay down your mortgage, but you can’t easily access cash or equity from your home, even with a HELOC. Also, lenders can shut down credit cards and HELOCs, even if you haven’t missed a payment. If your backup plan is to use credit to survive, you might not be able to access those funds if you need them.”
💡 Expert tip: Consider splitting your emergency fund between a high-yield savings account for immediate access and a short-term certificate of deposit for slightly higher returns on funds you’re less likely to need right away.
🔍 Learn more: Best high-yield savings accounts of 2025: AOL editor picks
2. Reduce high-interest debts
High-interest debt can quickly become unmanageable during an economic downturn, making debt reduction a critical recession-proofing strategy for homeowners already juggling mortgage payments, home insurance and property taxes.
Morgan emphasizes the importance of this approach: “When there is financial uncertainty looming, there are typically two things you need to prioritize — cutting expenses and saving money. Being able to reduce your expenses helps you weather any financial difficulty.”
Start with credit cards charging 18% or higher – every dollar you pay down saves you on interest. Consider the debt avalanche method: make minimum payments on all debts, then put any extra money toward the highest-interest debt first.
💡 Expert tip: When economic storms are brewing, it’s best to avoid taking on additional home equity loans or HELOCs that could leave you vulnerable if property values decline.
🔍 Learn more: How to pay off your credit card debt: A step-by-step game plan
3. Consider refinancing strategically
With rates currently hovering in the high 6% to 7% range and economists predicting only modest declines by year’s end, you need to be strategic about when and how you refinance. As Morgan says, “Refinancing likely does not make sense unless it will lower your mortgage payment or lock you into a fixed rate to make payments predictable going forward.”
This advice is particularly crucial if you have a variable rate mortgage or ARM, where payment predictability becomes essential during uncertain times. The numbers can still work in your favor though: For example, if you’re paying above 7%, even a one percentage point drop could save you more than $200 monthly on a $400,000 mortgage, adding up to around $2,400 in annual savings.
If refinancing makes sense for your situation, focus on rate-and-term refinancing to lower payments and build equity faster, not cash-out options that increase your debt. And if you’re planning to move within a few years, be careful — the costs of refinancing could exceed your actual interest savings.
🔍 Learn more: Can a debt consolidation loan help lower your interest rate?
4. Maintain healthy equity levels
It’s best to have at least a 20% equity buffer when a recession hits. This gives you crucial flexibility to sell quickly if needed, even at lower prices, without being trapped by your mortgage balance.
For example, if you owe $320,000 on a $400,000 home (or 20% equity) and values drop 15%, your home is now worth $340,000. You can likely still sell, pay off your mortgage, cover closing costs and break even. But with only 5% equity, that same decline leaves you underwater — or owing more than the home is worth.
Without that critical equity buffer, you’ll either be trapped or forced to bring cash to closing to sell your home. During 2009, nearly 25% of homeowners with mortgages were underwater at the peak. Many had to choose between strategic default (walking away and damaging their credit) or continuing to pay mortgages on homes worth less than they owed, sometimes for years.
🔍 Learn more: 5 ways to build equity in your home more quickly (and why it matters)
5. Turn your home into an income source
Your home doesn’t have to be just a monthly expense. Rather, it can become an income generator even during economic downturns. For example, you can consider renting out unused space like a basement apartment, spare bedroom or even a parking spot.
If you live near attractions or business districts, short-term rentals through platforms like Airbnb, Homestay and Agoda can be particularly lucrative. But even smaller opportunities add up: renting garage space or a shed can bring in $100 or more monthly — money that helps cover your mortgage during tight times.
🔍 Learn more: 20+ clever ways to save money: Smart strategies for boosting your bottom line
6. Consider strategic home improvements
Well-chosen home improvements can serve as both a hedge against economic uncertainty and a way to reduce monthly expenses. The key is focusing on upgrades that either cut your utility bills immediately or protect your home’s long-term value.
If your plan is to age in place at home, focus on renovations and upgrades that prioritize comfort, safety and independence — such as a walk-in shower, slip-resistant flooring or smart home devices that allow for easy control of lighting, cooling, heating and security.
If you expect to sell in the next five to 10 years, skip improvements that aren’t worth the investment for low-cost updates that offer the highest return, like basic landscaping and painting.
🔍 Learn more: 8 money lessons from the 2008 Great Recession that apply today: A reality check
High-ROI home improvements that can help save money
When economic uncertainty hits, the best home improvements aren’t just about aesthetics — they’re about reducing your monthly expenses while protecting your investment.
To recession-proof your home, first focus on budget-friendly fixes that can deliver immediate monthly savings, such as:
Smart home upgrades. Programmable thermostats, security systems with cameras, water leak detectors and smart electrical outlets can reduce utility bills while potentially qualifying you for a range of home insurance discounts that can lower your premium.
Weatherstripping and caulking. Sealing gaps around doors, windows and electrical outlets can help prevent drafts. This simple weekend project could help cut your energy bills by up to 10% and makes rooms more comfortable year-round.
Attic insulation upgrades. Adding insulation to achieve the appropriate home insulation “R level” for your climate can slash heating and cooling costs by 15% or more — and you may qualify for tax credits from the government. Use the ENERGY STAR rebate finder to see what’s available in your area.
LED light conversions. Consider replacing incandescent and CFL bulbs with LEDs throughout your home. LEDs use 75% less energy and last 25 times longer, saving households an average of $225 annually on electricity while reducing replacement costs.
Air duct sealing. Professional duct sealing can improve HVAC efficiency by at least 20% in homes with leaky ductwork. Many utility companies offer discounted or free duct testing to identify problem areas and rebates for work done.
Low-flow fixtures. Install low-flow showerheads and faucet aerators to achieve water savings by 25% to 60% without sacrificing performance.
Smart interior updates. Low-cost upgrades like fresh neutral paint, updated light fixtures and new cabinet hardware cost far less than a remodel but make spaces feel updated.
While these upgrades are relatively inexpensive, Morgan cautions against larger projects during uncertain times: “If you’re planning large improvements on your property, you may want to delay. Renovating your basement or adding onto your house can tap into cash reserves you may need if you lose your job.”
💡 Expert tip: Federal tax credits may cover 30% of installation costs through 2032 for energy-efficient upgrades, with home energy assessments also eligible. (The credit decreases to 22% in 2033 and 2034.) Some states — like California, Colorado, Minnesota and New York — offer additional rebates through the Inflation Reduction Act.
🔍 Learn more: Top 7 home renovations that can increase your property’s value — and quality of life as you age
Maintenance strategies to preserve your home’s value
Small problems often become big expenses when ignored. Some 83% of homeowners say they dealt with unexpected maintenance in 2024, nearly doubling from 46% in 2023, according to insurer Hippo. Staying ahead of maintenance issues now can prevent costly emergencies when you have less financial flexibility.
Here’s how to build a maintenance plan that protects your investment without breaking your budget.
Create a yearly maintenance schedule
Rotate seasonal reviews to stay on top of maintenance and replacement of your home’s most vital systems and safety features.
Season | Home areas to check or maintain |
Spring — March through May | ✅ Examine roof for loose shingles and gutter damage ✅ Call in a professional to service your HVAC system ✅ Seal gaps in exterior caulking• Refresh paint as needed |
Summer — June through August | ✅ Clean dryer vents and exhaust ducts ✅ Inspect decks and patios for damage or loose boards ✅ Test irrigation systems and outdoor water fixtures |
Fall — September through November | ✅ Clear gutters of leaves and debris ✅ Winterize hose bibs and sprinkler systems ✅ Test heating system and replace filters |
Winter — December through January | ✅ Check for ice dams on roof edges ✅ Inspect basement and crawl spaces for moisture issues ✅ Test sump pumps and backup generators |
Prioritize by financial impact
Focus your maintenance dollars where failures can hurt your wallet most.
System | Maintenance cost | Replacement cost | Maintenance tasks |
HVAC | $150 to $300 a year | $5,000 to $15,000 | Inspection, filter changes, duct cleaning, condensation drain line cleaning |
Roof | $300 to $500 a year | $8,000 to $25,000+ | Gutter cleaning, shingle inspection, flashing and downspout checks |
Water heater | $100 to $200 a year | $1,200 to $3,000 | Annual flushing, anode rod replacement, inspection and cleaning |
Plumbing | $200 to $400 a year | $3,000 to $20,000+ | Pipe insulation, fixture maintenance, leak detection |
Make smart DIY vs. professional decisions
While professional services help ensure quality work, you can probably handle many routine tasks yourself to stretch your maintenance budget further. Mastering these DIY basics could save you hundreds annually:
Caulking and weatherstripping
Basic painting and touch-ups
Filter replacements and simple fixture repairs
⚠️ When to leave it to the pros: Electrical work, structural repairs, major plumbing, roofing and gas appliance repairs — DIY mishaps in these areas can cost thousands more than professional service.
Don’t neglect maintenance to save money
With potential tariffs threatening to increase building material costs by 10% to 25% in 2025, addressing maintenance needs now may be significantly cheaper than waiting. Deferred maintenance is like compound interest working against you — small problems multiply into major expenses when economic stress makes them harder to afford.
Insurance strategies to manage risk to your home
Economic uncertainty makes adequate insurance coverage more important than ever. Be sure to review your policies now to ensure you’re properly protected without overpaying.
Analyze your coverage levels. One in four homeowners say they’re unprepared for the potential cost associated with extreme weather events, according to Bankrate. Ensure your dwelling coverage reflects current replacement costs, not just your home’s market value. With inflation affecting construction costs, you may need to increase your coverage limits.
Understand what’s covered. Review your policy’s exclusions and consider additional coverage for events common in your area. Don’t assume standard homeowners insurance covers everything — flood and earthquake coverage typically require separate policies.
Use asset protection strategies. If you have significant home equity or personal wealth, consider umbrella insurance to protect your assets from liability claims. This coverage is relatively inexpensive and can provide substantial protection.
Prepare for natural disasters. Create a comprehensive inventory of your belongings with photos, videos and receipts. Store important documents in a fireproof safe or safe deposit box, and upload your documents and photos to cloud storage. Having detailed records can speed up claim processing and help ensure you receive fair compensation.
Look for discounts. Many insurers offer discounts for home security upgrades, including security systems, fire alarms, storm shutters and energy-efficient upgrades. Ask your insurance company or agent to see what discounts you may qualify for, especially if you’ve made recent improvements.
🔍 Learn more: 7 hidden home insurance benefits and perks you’re probably not using
What to know about selling your home during a recession
Selling during economic uncertainty presents both challenges and possible advantages. While you’ll face a more cautious buyer pool and possibly lower prices, you may also encounter less competition from other sellers who are waiting for better conditions.
Here’s what to consider:
Selling vs. holding. Consider your personal situation first and foremost. If you need to downsize for financial reasons or lifestyle changes, don’t let market timing dictate your decision. However, if you’re selling purely for investment reasons, holding might make sense if you can afford to wait.
Longer selling times. During economic uncertainty, homes typically stay on the market longer as buyers become more selective and cautious about major purchases. Budget for extended carrying costs — including mortgage payments, utilities, insurance and maintenance — while your home is listed.
Renting as an option. If you’re not ready to sell but need additional income, renting out your home or part of it could provide cash flow during tough times. This strategy works especially well if you’ve paid down your mortgage significantly or if rental demand remains strong in your area.
Avoid over-improvements. If you decide to sell, resist the temptation to over-renovate. Most home improvements won’t give you a 100% return on investment. Focus on necessary repairs and cosmetic improvements that help your home show well, rather than expensive upgrades you won’t recoup.
Price strategically. In uncertain markets, competitive pricing becomes even more important. Be prepared to be flexible on price and terms to attract serious buyers.
🔍 Learn more: What not to fix when selling a home: 7 updates to skip (and avoid wasting money)
Special considerations for pre-retirees
If you’re approaching retirement during these uncertain economic times and a volatile stock market, you face unique challenges that require extra planning. The combination of potential recession and retirement transition creates a situation that requires careful financial positioning.
Debt and bankruptcy attorney Ashley Morgan, who regularly counsels clients navigating this dual challenge, offers this advice: “If you’re heading to a recession and retirement at the same time, you really want to examine your financial situation. If you are at all worried about living on your retirement or worried about stocks dropping in value, you may want to plan to work a bit longer.”
This isn’t just about market conditions — it’s about financial reality. Working even one or two additional years can dramatically improve your retirement security by allowing you to delay Social Security and increase future monthly benefits, contribute more to retirement accounts and avoid withdrawing from investments during market downturns.
Morgan also emphasizes the importance of expense management during this transition: “If you’re able to cut expenses while still working, it will give you the ability to save more and go into retirement with a more tolerable budget. Too often, people fail to reduce spending while working and cannot handle the same expenses on their retirement income.”
🔍 Learn more: Recession-proof your retirement: 7 financial strategies to weather market storms
Other stories in our money and budgeting series
6 ways for mature homeowners to save on insurance (that can work for you too)
Can you still retire in 2025? Here’s what the experts say amid market volatility
Should you use your home equity to pay off high-interest debt?
Debt consolidation vs. debt payoff vs. debt counseling: What’s the difference?
Can you still retire in 2025? Here’s what the experts say amid market volatility
How to budget in retirement: 7 steps to maintaining your finances on a fixed income
FAQ: How to face a potential recession
Learn more about ways to recession proof your home with these commonly asked questions. And take a look at our growing library of personal finance guides that can help you earn money, save money and grow your wealth.
Will housing prices drop during a recession?
While there’s no way to answer this question with certainty, homes located in economically vulnerable areas with poor job markets and high inventory are more likely to experience price declines. Conversely, areas with strong employment, limited housing supply and diverse economies tend to be more resilient in a market downturn.
Is it worth paying for a financial advisor to plan for retirement?
Yes, for most people. A financial advisor can help you manage your money as you plan for retirement, while giving you a sense of how much you can spend during retirement to make your savings last. Their financial advice and market expertise may also help maximize your savings. If you’re anxious about retirement, working with an advisor can also give you peace of mind by assuring you that you’re on the right path. Start with our guide to finding a trusted retirement advisor.
Should I renovate my home during a recession?
It depends. If you do proceed, be cautious and focus on necessary maintenance and high-ROI improvements rather than luxury upgrades. Consider your job security, emergency savings and overall financial stability before committing to any renovation project during uncertain economic times.
Should I pay off my mortgage early during a recession?
Generally no. You’ll want to keep your mortgage payments the same and use extra money to build a larger emergency fund. You’ll need liquidity more than home equity if you lose your job or face unexpected expenses. Focus on having six to 12 months of expenses saved before accelerating mortgage payments. Learn more about the factors at play in our guide to early mortgage payoff.
Can I switch my homeowners insurance provider?
Yes, you can switch to a new homeowners policy — even in the middle of your policy term. Unlike some other types of insurance, many homeowners insurance policies typically allow you to cancel at any time and get a refund on the unused portion. Indeed, home insurance companies bank on their customers’ inertia — sometimes changing providers is exactly what you and your home need. Learn more in our guide to switching your homeowners coverage, including money-saving tips.
Sources
Nearly One In Four U.S. Homes With Mortgages ‘Underwater,’ NPR. Accessed May 29, 2025.
Seal and Insulate with Energy Star, U.S. Environmental Protection Agency. Accessed May 29, 2025.
Methodology for Estimated Energy Savings, U.S. Environmental Protection Agency. Accessed May 29, 2025.
LED Lighting, U.S. Department of Energy. Accessed May 29, 2025.
Benefits of Duct Sealing, U.S. Environmental Protection Agency. Accessed May 29, 2025.
Reduce Hot Water Use for Energy Savings, U.S. Department of Energy. Accessed May 29, 2025.
Hippo Housepower Report: Home Protection Priorities in 2025, Hippo. Accessed May 29, 2025.
About the writer
Kat Aoki is a seasoned finance writer who’s written thousands of articles to empower people to better understand technology, fintech, banking, lending and investments. Her expertise has been featured on sites like Lifewire and Finder, with bylines at top technology brands in the U.S. and Australia. Kat strives to help consumers and business owners make informed decisions and choose the right financial products for their needs.
Article edited by Kelly Suzan Waggoner
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