Buying a home in a time of recession has pros and cons, and both aspects should be examined before making this move. During a recession, the US economy declines, the housing market and home prices are depressed, and there are high unemployment figures. Consumers tend to be nervous about making large purchases or long-term financial commitments, and lenders require great credit to even consider a home loan. With all of this, it may make sense for some people to buy a home during these economic times, as long as the pros outweigh the cons. A careful assessment must be made to examine the individual situation, and this can help determine if the advantages of buying a home during tough economic times outweigh the disadvantages.
Advantage: There are many advantages to buying a home during a recession. As long as you have a credit score of 700 or higher and can afford a 20% down payment, most lenders will offer a mortgage. In a recession, home values often plummet, and this means you can get a house for much less now than you did five years ago. There is a wide range of homes on the market, and these include foreclosures and private sellers. Mortgage rates and current interest rates are incredibly low, and homes on the market are priced at fantastic savings in many cases. Another plus is that first-time homebuyers can take advantage of tax credits worth thousands of dollars. In addition to a large number of foreclosures, many homeowners have found themselves underwater and may be extremely motivated to sell. The real estate market is a strong buyer’s market right now, making it an ideal time to buy for many.
Cons: While buying a home during a recession has many benefits, it’s important to remember that there are also drawbacks. During a recession, future economic prospects are unclear and there is a lot of uncertainty. Home prices could continue to fall after you buy the home, causing a rapid loss in value and equity. You could end up losing your job if your employer downsizes or closes its doors, and this could make it impossible for you to keep up with your mortgage payments. In tough economic times, many people move to a better location, and if you’ve bought a home, this can be difficult to do. The rising cost of fuel and food can cause finances to tighten, and this could result in foreclosure in the future.
Buying a home during a recession will make sense for many people. You can get a bigger, higher-priced home for less thanks to falling home values, but this could also be a drawback after you’ve made the purchase. This method can be very beneficial for many, but it is not suitable for everyone. For some people, the drawbacks of this purchase and the uncertainty caused by the bad economy mean that now is not the time to buy a home.