Whether you’ve been eyeing an urban condo, lakeside cottage, or desert villa, buying a new home is a significant investment. But the question is: should you buy a property when the U.S. economy is heading for a recession? Absolutely, yes! In fact, buying a property during a recession is wise if you’re financially stable.
Speaking of the U.S. economy, so far, it is resilient. But economists believe that recession will soon hit the U.S. economy. Since 1945, the United States economy has seen 13 recessions, the majority of them manifesting as drops in the stock market.
While many dread to use the R-word, the warning signs indicate that the U.S. economy will plunge into a recession later this year. An increase in layoffs, which is currently on the rise, is a tell-tale sign of the economy losing momentum.
As recession equates to an economy’s devastation, sales in the real estate market get slow. This means there will be an eventual drop in home value. That’s why it’s can be a good time to buy a home or other commercial property.
Having said that, here are some tips that will help you hunt a house during a housing market downturn:
Sure, you are at an advantage during a downturn in the housing market. But don’t you think going transaction blind is something that should be avoided, no matter what? For this reason, conducting thorough research is important.
There are hundreds of resources on the internet that will help you navigate the market. Start by searching the internet for property listings. If you’re new to the real estate market, real estate agents or realtors will be of great help.
These agents are thorough with the ABCs of the real estate market. That is why you will get to know the price range of the property area by area. A detailed conversation with them will help you understand what’s low and what’s exorbitantly priced. As such, you will get insight into the negotiation room and make a realistic bid for the home you intend to buy.
By now, you must have got an idea about the property rates area by area. Before you proceed forward, set a realistic budget. It’s important to know how much money you can afford to spend on your new home.
Many buyers often start zillowing and start looking for houses without even setting a budget or a plan to buy one. Guess what happens? They do find their dream home, but it is often beyond their means. You wouldn’t want to put yourself in such a situation, would you?
If you’re a newbie on the market or bad at managing finances, getting in touch with a financial advisor will be wise. Why? A financial advisor will help you evaluate how owning another home will fit into your financial picture. Together, you can figure out answers to various questions about your current financial position, retirement plans, debt-to-income ratio, and other aspects.
Burton Enright Welch believes that when investors react to the emotional, media-driven fluctuations of the market, they jeopardize the long-term outcomes they seek. Taking a disciplined approach is important when investing in real estate. That is why you should always start with financial planning when it comes to buying a home during a recession.
Now, get this straight into your mind: you aren’t the only house hunter with their eyes on a particular home. Hence, you shouldn’t delay the home-buying process. No matter how much edge you have, another buyer may take advantage of your deal.
Get your application pre-approved for a mortgage so that you can pounce on a deal at a minute’s notice.
Lining up an insurance agent and a home inspector will also be of great help. That’s because these professionals supply valuable information to buyers about properties and their areas. They also let the purchaser know early on about the items or portions that will have to be repaired. During the attorney review process, these professionals will also let you know the cost you’ll have to pay to insure your home.
Buying a property in a down market doesn’t mean you should let your emotions get in your way. If you like a property more than others, purchase it right away to avoid regret.
You may be tempted to trigger a bidding war, but that would be of no use. Say no to a bidding war because it’s nothing but a waste of your precious time. Down markets are all about getting a good deal, so wasting that opportunity for ego is silly. The best way to avoid a bidding war is to decide on a price limit and stick to it.
Buying a house during the recession is a sound decision you can make if you’ve got the means. That’s because it’s the only time when property prices are low. In fact, the lowest they will be for at least a decade.
Rushing into the purchase is a big no-no! Understand the big picture and evaluate how it will affect your finances. Also, make sure you have enough money in hand, both incoming and savings.
However, if you’re uncertain as to how you’ll pay the mortgage, it’s best to avoid buying a home during a recession.