Buying During a Recession: A Real Estate Guide 

by Suzie Wilson (Guest Contributor)

 

The COVID-19 pandemic has had a huge impact on the economy. If you’re in a secure financial position, however, real estate can look pretty attractive at the moment. Interest rates are low right now, meaning buyers can land a very friendly monthly payment. However, there are drawbacks and risks when it comes to buying during a recession. Whether you plan to buy for yourself or as an investment, there are plenty of things to consider. Here’s a look at how to tell if now is the right time for you to buy a home:

 

Evaluating Your Financing

 

The first thing to do before deciding to buy during a recession is to take a hard, honest look at your financing. Are you truly financially stable? Would you continue to be financially stable if you lost your job? Do you have enough runway built up in your emergency fund to sustain a long job hunt while paying off a mortgage? Don’t assume you’re ready to buy just because you aren’t struggling right now. A struggling economy can impact anyone. Don’t move forward unless you’ll be safe in the event of a financial emergency.

 

It’s also worth looking into all of the financing options available with your lender. You may have only considered a traditional mortgage, but an FHA loan can be a good alternative for first-time home buyers. Putting down a smaller downpayment can give you a little bit more accessible cash to keep in your emergency fund. This can make all the difference if you wind up losing income for a while.

 

Gauging the Market

 

Spending some time researching the housing market in your area will also help you figure out if now is the right time to buy. Although there are definitely still properties going up right now, some sellers are hesitant to try to manage a sale during the pandemic. As a result, it’s possible there aren’t a ton of options in the neighborhoods you’d like to invest in.

 

Remember, location is still key, whether the home is for you or for renters. After all, you can’t relocate a home. Walkability, safety, and convenience don’t go out of style during a pandemic - if anything, the value of options close to home is higher than ever before. Keep a close eye on the market, but don’t settle for something in a less desirable neighborhood just because it feels like a good time to buy.

 

Think Long Term

 

Now might be a great time to invest in real estate - as long as you’re looking at the big picture. The fact of the matter is, moments of economic instability offer no guarantees in the short run. If you’re looking for a quick flip or an immediate ROI with renters, you could easily wind up disappointed.

 

However, in the long run, you could wind up making a solid profit. Economic downturns can land you a good price and a great rate. If you plan to live in the home for several decades, or are willing to fix it up and sell or rent it once the market has turned back around, you could end up making a killing. This could be doubly true if you manage to invest in an up-and-coming neighborhood. There are always still risks, but if you’re looking at the big picture, you’re a lot more likely to come out ahead.

 

Figuring out if now is the right time to buy means doing your homework and taking an honest look at your financial situation. If it is, however, you might just be in a fantastic position. This market offers a great opportunity for the right buyer. The only question is: Is that you?

 

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