Buying a Home During a Recession: How to Navigate the Market
Many homebuyers hear the word recession and have flashbacks to the housing market crash of 2008, which went hand in hand with our last recession. While it’s still unclear whether we will officially enter another recession soon, economic conditions hint that we are headed that way. So, should you put off buying a home now and wait for more stable conditions?
Recessions’ Effect on the Real Estate Market
The fact of the matter is that recessions don’t always have the same effect on the real estate market. Each recession that has hit the United States has come from a unique set of conditions, and no two are the same. That means that the housing market has felt different consequences each time.
For example, we know that the 2008 recession was caused in large by the bursting of the housing bubble, which caused home prices to plummet. However, in the early 2000s, when we experienced the Y2K scare, interest rates remained low, and house prices soared as many sought investments that were considered safer than the stock market.
There is no one size fits all answer to whether buying a home during a recession is a good idea. Instead, you need to look at the specific market conditions to make an informed decision.
Real Estate Market Conditions in 2022
If you’ve recently shopped for property, you know that the real estate market has been extremely hot post-Covid shutdowns. A combination of low interest rates and less supply than demand pushed housing prices into record highs.
But, as our government begins to make policy changes as a reaction to the current recession, we will inevitably see effects on the housing market. For example, actions to contain inflation have indirectly caused mortgage rates to increase. On top of that, inventory is finally catching up to demand. However, while these conditions indicate that prices should begin to come back down, experts don’t see that happening anytime soon. House prices are still at record-breaking highs.
How to Navigate the Market
The circumstances of this recession are much different than many we’ve seen in our lifetimes. It’s impossible to predict exactly what will happen, so when deciding whether now is the right time to buy, you must look at your individual financial situation and housing needs.
In these unpredictable economic conditions, you’ll want to seriously consider your income stability and whether you have an emergency savings account for unexpected situations. While it’s impossible to time your home purchase perfectly with the market, you can make sure to make the right decision for your family by sticking to your budget and not making too many sacrifices when shopping for your dream home.
Now is the time to take home buying slowly as inventory and competition increase. Don’t overpay for a house because you get caught up in the scarcity mentality. If you’re not in a time crunch to buy your home, it may be your best bet to see if interest rates start to drop.
Let a Professional Guide You
If you’re in doubt about whether now is a good time for you to buy or not, the best thing you can do is consult a trustworthy real estate agent who knows the market. If you’re looking for real estate in San Jose, California, contact Lacey Deverick today so she can help you navigate through the market in these uncertain times.