People say this a lot, but it makes no sense to me. A recession comes with lower incomes and wealth for everyone, so affordability doesn't change for the average person. It only increases it for those who had a short position in their asset allocation, but that's just investment outperformance which you can have even without a recession.
You're generally right except it's not true for everyone. Every recession that hits a lot of folks just keep their jobs and their salaries. Maybe their stock portfolios (for the few who have those outside of 401k's) take a hit. But the key is that if there's a real estate downturn, almost every single home (house, condo and even land) takes a hit and so you end up with a situation where all the inventory drops in price, but not all the eligible buyers "drop in price" (i.e., not all eligible buyers suffer a downturn and so, net, you actually get more people into homes).
The key of course is that the downturn isn't so massive (hello 2008!), where the blood flows so freely that the layoffs/foreclosures/etc. overwhelm the eligible buyer pool in absolute numbers. That can for sure happen, but is atypical historically.
You've just listed a set of specific circumstances under which some number of people might find housing more affordable, but that's a lot more like "investment outperformance" driven affordability than "broad based housing price decrease" affordability. That can happen even without a recession. A small number of people could've found Bay Area houses more affordable in the last decade if they were HODLing some 10x stock.
FWIW I think I just listed a set of circumstances that happen every time there is a drop in housing prices historically, at least going back to the 90's savings and loan crisis. I'll tell you when people found Bay Area houses more affordable? 2009-2012. And during that time the unemployment rate was at roughly 10 or 12% (had to look it up just now but knew it was around there). Housing prices during that same time? Dropped as low as 40-50% in some parts of the Bay (best case they were down 20%+). 10x stock needed? No. A job? Yes. You can repeat the exercise for the start of Covid, but the timeline for the drop in prices, and the % drop, was muted in comparison to the housing crisis. Same for S&L crisis. Dotcom bust too, though, again, housing prices didn't crater like the housing crisis.
