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Is It Good to Buy a House During a Recession, Or Should You Wait?

  • Purple Realtors by
  • 19 April 2020
Is It Good to Buy a House During a Recession, Or Should You Wait?

It’s been more than a decade since the Great Recession of 2008, and the housing market has rebounded nicely. We’ve seen at least one cycle including a seller’s market, when homes sell fast for higher prices — making it a difficult time to be a buyer.

If you’ve wanted to buy a house forever but prices are simply out of your reach, you might have considered waiting until the next recession to start your house hunt. Is that really a good idea?

To understand whether it is good to buy a house during a recession, and if we’ll see another recession like the one that hit us hard in 2008, we spoke to some top experts in real estate.

What exactly is a recession?

First, let’s dive into what a recession actually is.

Simply put, a recession is a time in which the economy stops growing.

A recession is “a significant decline in economic activity” that is widespread and lasts several months.

Recessions are normal and inevitable, but they understandably make homebuyers weary. The job market becomes less stable, and lending standards become tighter, meaning buyers need to be confident they can weather any financial storms headed their way.

How recessions affect real estate prices

Most recessions aren’t strongly tied to real estate, but the 2008 recession definitely was. Most of us can clearly remember the 2008 recession, when home values suddenly plummeted.

Many people were forced to foreclose on their homes, leaving houses empty and allowing those in a position to do so to snap up houses for cheap.

That’s because recessions lead to loss of jobs and income, and when people lose jobs, they won’t make a long-term investment such as a home purchase,”.

In other words, when the demand for homes shrinks, home prices fall right along with it.

Why you should buy a house during a recession

The first obvious pro to buying a house during a recession is that housing prices are lower, so buyers can afford to purchase homes that may have been out of reach for them before.

“Homes are cheaper during a recession, so that’s good for homebuyers if they have the financial capacity — income and enough savings — to keep making those mortgage payments even if they get unemployed for some time,”.

Mortgage rates are also likely to be lower during a recession, so buyers get the benefit of both a low interest rate and low prices.

“The lenders were offering incredible deals, so in terms of the advantage of the buyer, buying in a recession is very good,”.

So, is it smart to buy a house during a recession?

The experts agree that buying a house during a recession can result in scoring a great value on a home that may have been out of reach during better economic times. But if you want to buy during a recession, you need to have:

  • Stable employment
  • Plenty of savings
  • The ability and motivation to do research and pay for inspections on the home you buy
  • The emotional wherewithal to walk away if the home is ultimately not the right fit for you

If buyers can check all of those boxes, there’s no better time to buy than during a recession.

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