Is an Economic Slowdown Good or Bad for the Housing Market?
With more Americans concerned about a possible recession, is it still beneficial to buy a house? Here’s what you need to know about an economic slowdown, its potential impact on your finances and how to stay positive despite it all.
Should You Wait Until the Economy Is Good Before Buying My First Home?
It can be tempting to wait until economic conditions are ideal before buying a home, but there are several reasons why you shouldn't wait. First, interest rates are still historically low and could dip as inflation cools. Second, prices may rise as the economy improves, so it's better to buy sooner rather than later. While it's true that mortgage rates could dip in a recession, there are other factors to consider. For example, unemployment rates would also likely rise, making it harder to qualify for a loan in the first place.
Buying Your First Home When You Don’t Have a Lot of Savings Can Be Risky
It can be challenging to come up with a 20% down payment, and you may have to pay private mortgage insurance (PMI). You also may not have any equity in your home yet, so if there is a drop in home prices, you could end up owing more on your mortgage than your home is worth. Yet, interest rates are still low, so you would be able to get a lower monthly payment.
Home Prices Are Unlikely To Fall
In the previous recessions, home prices remained stable or even climbed somewhat while mortgage rates decreased. Real estate assets perform well during recessions and have been well protected. The U.S. has faced economic slowdowns before without experiencing losses in housing, but this time it's still too early to tell how it will go.
Real Estate Is a Long-term Investment
When you buy a house, you're usually not planning on selling it tomorrow. You're looking at it as a long-term investment, which is good because it gives you time to weather any economic storms. Despite concerns about a recession, now is a good time to buy because interest rates are low. So if you're thinking about buying a house, don't let fears of an economic slowdown stop you. Interest rates are still historically low, with the possibility of going lower once inflation cools off, and real estate prices will only increase, especially in the long term.
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