Should A Looming Recession Delay Your HomeBuying Plans?

September 05, 2022

Looming Recession Delay Your HomeBuying Plans?

The coronavirus pandemic changed a lot about the world.

One thing that hasn't changed is the need for people to buy and sell homes. In fact, despite high inflation and other negative economic signals, home prices and demand continue to rise in many parts of the United States.

This is due, in part, to fewer people listing their homes and more people taking advantage of historically low-interest rates, but that is changing. For help deciding what you should do if you’re thinking of buying a home, use the guide below presented by United Country Real Estate.

A Brief Explanation

Before we look at whether or not a recession should change your home-buying plans, it’s important to know what a recession actually is. According to the investment website Acorns, it’s not all that easy to put a binding definition on the term. Most experts agree, however, that a recession is a noticeable decline in economic activity across the entire country. Typically, a recession triggers high unemployment rates and plummets consumer confidence. Manufacturing slows and real estate prices often drop. The potential forthcoming recession may be negligible.

How To Buy During A Recession

Connect with a real estate agent. Any time you buy a home, you’ll want to do your research. Start by partnering with an experienced real estate agency like United Country Real Estate. These amazing professionals can help you sort through listings to choose a home that fits your needs and budget. Diane Ives can help you make a smart decision, particularly if you’re relocating from far away and need someone on the ground in your chosen new hometown.

Get your finances in order.

Next, familiarize yourself with the financial steps involved in the home-buying process. If you’ve lost your job due to the pandemic, you’ll need to have a serious talk with your lender. They’ll want to know if your job is waiting or if an unexpected career change is on the horizon. If you’re married or buying with a partner, at least one of you will need a steady income.

As a first-time home buyer, you will also want to make sure you’re familiar with your credit score as well as the lending options available to you. Take a close look at your savings account, and make sure you have the money available for a down payment; this is typically 3% to 20% of the purchase price. Ideally, you have a credit score of at least 620 to 640, which will help you qualify for a better interest rate. Your lender will also likely require that you have a comfortable debt-to-income (DTI) ratio, which is determined by each mortgage agency. The Consumer Financial Protection Bureau advocates for a Total DTI of no more than 43%.

Begin the search.

Once you’ve got your finances in order, you can start looking for houses. Fortunately, because of the pandemic, it's easier than ever to tour properties remotely. This saves you time, as you’re not driving back and forth to houses that don’t quite capture your attention.

Once you’ve found homes you want to see in person, make your visit count. Look for potential issues that could affect the property value. Some of these issues include a damaged foundation and current upgrades as well as its overall condition and whether or not it has potential for later expansion. The last thing you want to do now is to overpay and lose money down the road.

If there are issues with the roof, for example, search online for local roofing companies to take on the job. Roof issues aren’t something to be ignored, but neither are they something to fix yourself. Instead, read online reviews of various service providers until you find one that meets your needs.

Ultimately, buying a home during a recession isn’t that different from buying a home at any other time. The primary difference is that you need to pay close attention to prices, which can fluctuate with little warning. Talk to Diane Ives for more guidance; she can help you get your footing, and are your best source of current information about the local market.