As you can see from this chart, home prices don't always decline in a recession. They declined in the Great Recession because that was rooted in poor mortgage lending practices. But there was no such decline in 2000 or 1991. 1991 went flat, but no decline. I think it would take a lot of people to lose their jobs plus the Fed to have lowered interest rates as much as they can in order to see home prices decline. Keep in mind that even if this virus causes the stock markets to decline, that says nothing about GDP until those reports are released (and I know GDP isn't a perfect measure, but it's best we currently have).
Housing prices could go down but things would need to get a lot worse. Rates are low and heading lower which is favorable for the housing market. With unemployment low, more people will be okay taking out loans to purchase properties. But at the same time if things worsened and businesses shut down, many people who are out of work wont be able to afford their mortgages. They’ll be forced to sell their homes. Real estate prices may decline in a mass liquidation event just like the stock market. Then real estate investors will step in to help support the market as more people start renting instead of owning. It depends on the magnitude of the recession and what’s driving the markets.
Taxation also has a noticeable impact on the housing market. Not payroll taxes, but property and other perhaps local taxation. I read somewhere last week, some part of Sweden has implemented a fine if your hedges and bushes in your yard are not maintained at the mandated height. Remember the window tax? the brick tax? And the pension crisis looms... municipality workers, police, fire, etc need pension checks... property tax is a certain target. BTW; lower interest rates exacerbate the pension problem.
Low rates will keep a floor under the housing market IMO. If we get a recession, stocks fall so money will look for a place to get a return. Low rates and falling stock prices don't leave many other good investment options. I've been in the rental property market the past 8 years and currently looking for 2 more units to buy. When rates were rising I was getting more comfortable with cash in the bank but now not as much. The current housing situation is stronger than usual IMO since so much of housing got transferred to landlords from homeowners during the last housing crisis. Homeowners have mortgages but landlords pay cash. Less forced sales. There has been some talk of higher property taxes which could put a damper on prices.
I would only start to worry about housing if Fed drops rates several more times without any real bad economic data. Because then they'd have no room to drop further. But they're probably too smart to do that I hope.
In 2008 the fed was able to cut rates from 5.25% down to 0.25%. That helped the housing market. In fact it was a massive bail out to those with mortgages. This time it isn't going to be so easy. Not much room to cut rates. Going from 1.5% back down to 0.25% isn't going to help much.
IMO, cutting rates from the low levels they're at now won't do much good for the economy. If rates go lower and the economy isn't falling apart, that's just more incentive to move money into housing. Cutting too much is probably a sign the economy isn't looking so hot so housing may take a hit too depending upon severity of the recession. I'm looking to buy 1 now then may wait to see how the virus situation ends.