Expert advice: Should I buy a home with

EXPERT ADVICE:

SHOULD I BUY A HOME WITH FEARS OF A RECESSION?

Joe L. Fisher

The flames of the Covid-19 pandemic continue to burn persistently across the whole U.S and the world at large. As the pandemic causes more and more pain to the economy, there are more questions right now than answers. When could the current economic crisis come to an end? Is the current recession headed to a crash, or is it just a slowdown? How hard could the recession hit the housing market?

Even as the federal government is laying down plans to reopen the economy, most people, especially home buyers, are finding themselves in a very confusing situation on what decision do they make. The World Health Organization recently declared that Covid-19 is not likely to go away quickly, as we all had anticipated. This announcement by the WHO put homebuyers in a more profound dilemma. Some home buyers have

been caught in between the thoughts of buying a home amidst the current or holding on until the state of normalcy come back. IN FEBRUARY, some economists warned of the likelihood of a recession occurring by next year. On the other hand, some other economists say that we are already in recession since every or at least most of the major economic activities have paused as the number of unemployed people in the U.S continue skyrocketing. Looking back at what happened during the Great Recession between 2007 and 2009, many people are getting scared of buying a home during such uncertain times. The memories of the Great Recession have never been forgotten. The pain of losing a home or watching your neighbors lose their premises was among the Great Recession’s major characteristics.

Although the housing market caused the Great Recession, it seems to have almost the same characteristics as what were are experiencing due to coronavirus pandemic. The Great Recession was a result of the housing market policies that made it easier for everyone to qualify for a mortgage. Many people got mortgages, and most of them were not in any position to pay back. Similarly, the coronavirus pandemic is causing a downward trend in interest rates, which is followed by a dramatic increase in demand.

Greg McBride, the chief analyst at Bankrate, commented on the current situation and said, “Despite fear and uncertainty, investors should think to the future, beyond the economic pause and when business and life

resumes normalcy. The short-term disruption is unprecedented, but the long-term viability of the economy is not.” A home is more than an investment; it is a place to live. And therefore, with incredibly low mortgage rates, many buyers may find this as the perfect time to get themselves a home. However, it is still challenging for many to buy homes even with the low rates as many are not able to qualify for a mortgage loan due to the uncertain situation on their sources of income.

Buying a home during a recession may be the best decision but not for everyone. For those with confidence in their future income flow despite the current economic crisis, such as those dealing in businesses that are still running well amidst this crisis, they can take this period as the perfect opportunity to buy a home with the low mortgage rates. The current trend of the housing market is gradually turning in favor of the buyers’ market as the demand continues dropping, causing a relative drop in prices.

Jessica Whiffen, a licensed realtor with Premier Sotheby’s International Realty in Naples, Florida, states that buying a home with fears of a recession could be the best move to get yourself a great deal, but it also comes with a financial risk which is a limited room for negotiation. “You are not in a traditional negotiating situation, where the buyer is on one side of the table, and the seller is on the other,” Whiffen states. “It is more like a triangle, in which the seller is the middle-man, and doesn’t have much say. You are essentially only negotiating with the bank.”

In my opinion, buying a home during a recession depends on the current state of your income generation and how much risk you are willing to take. Just like Greg McBride says, “It takes nerves of steel to sign up for the largest financial commitment you’ve ever had at a time when the economic outlook is bleak, unemployment is rising, and fear and pessimism are rampant.”

If your business is still operating and generating income normally during the current economic crisis, or if you are confident about your job security currently, or if you have enough savings and outstanding financial stability to survive you through the current economic tussles, this is the best time to buy your dream house. However, if the current economic decline has struck your business, this is not the perfect time for you to buy a house.

For further advice on the housing market in the current situation, you can reach out to Joel L Fisher. Joel is one of our VIP Agents and a real estate industry guru with knowledge of a way around the real estate market especially in Richmond. You can get in touch with Joel at https://thepowerisnow.com/joe-fisher/.

Works cited

https://www.bankrate.com/mortgages/buying-ahome-before-recession/.