House Buying Tips to Keep in Mind During a Recession

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House Buying Tips to Keep in Mind During a Recession

Buying your first home or investment property is an exciting time. However, it can also be a little stressful if you’ve decided to purchase during a recession. Buying a house in a recession involves most of the same basic steps, but you’ll want to take extra things into consideration. Below, learn what steps you’ll need to take and find out what you should think about before purchasing your home or investment property. 

Is Now a Good Time to Buy?

It’s undeniable that the COVID-19 pandemic has created a recession. However, Forbes explains that at this point, it is unknown how long the economy will be down as a result of the pandemic. Buying a home during a recession might seem like a bad decision, but this isn’t necessarily the case. 

Home prices tend to drop through the floor during a recession, but Vox notes that this hasn’t been the case so far with the current housing market. However, even though home prices haven’t changed significantly as a result of the pandemic, mortgage interest rates have. However, even with low rates, it’s important to understand loans might be more difficult to get.

Are You Ready for Homeownership?

As with any large purchase, it’s important to consider your individual situation. For people who have lost their jobs or face other financial uncertainty as a result of the recession, a home purchase is out of the question right now. However, if you have a secure job, your credit history is good and your savings haven’t been affected, now might be an ideal time to buy. 

Moving forward, though, you should think about more than just your current financial situation. It’s also important to consider things such as your current debt-to-income ratio and your future lifestyle needs. 

Comparing Lending Options 

After deciding that now is a good time to buy, you’ll want to look at financing options. It’s important to do this before you start touring homes or falling in love with any properties. Comparing mortgages and getting preapproved will give you a leg up in negotiations and show sellers that you’re a serious buyer. 

One type of financing you’ll want to consider is an FHA loan. These loans, insured by the federal government, are a good option if you have limited money for a down payment or your credit is less-than-perfect. If you’ve been having trouble meeting the requirements for a conventional loan, an FHA application might be your best option. 

Searching for Homes 

After securing financing, you can get serious about your real estate search. Despite the recession, location is still one of the most important factors you’ll want to consider when looking around. Some neighborhoods will be more affordable than others, so it helps to compare more than one area. Working with a real estate agent is a good way to get help with your search if you don’t know where to begin. 

Keep in mind that during recessions, a lot of house hunters are out looking for bargains. This can lead to a lot of competition in popular areas. In Atlanta, for example, homes currently sell for an average of $346K and only stay on the market for about 41 days. In a market as competitive as this, you might need to take extra steps to make your offer stand out. 

During a recession, you’ll find a wide variety of homes to choose from on the market. Some may be foreclosures or fixer-uppers, while others will be move-in ready. If you can’t find exactly what you’re looking for, keep in mind that just about any house can be made into your dream home with the right upgrades and design choices. For example, you can make the most of a smaller kitchen by getting more creative with your storage ideas. 

Buying a home or investment property during a recession can seem like a risky move, and for some people, it is. However, if you are in a good financial situation, you might find that now is the perfect time to buy your first home, recession or not.

Suzie Wilson