📉 Are you AFRAID of an economic recession?

What are the pros and cons when considering buying a home during a recession?

Economic experts have been debating for over a year on whether or not we are going to see a full economic recession. Although the national real estate market has been in recession already since 2023, the verdict is still out on whether not we’re going to see obvious economic downturns. And perhaps any turbulence seems even more unlikely to occur during a presidential election year when candidates want to present a sense of stability, prosperity, and hopefulness to the American public.  

Regardless of there not being a clear recession just yet, most Americans are feeling a pinch from recent price increases due to rampant inflation following the Corona Pandemic, but the market has remained impressively resilient, with consumer sentiment and spending high, a notably low unemployment rate, and strong GDP growth starting in the last quarter of 2023 and remaining for the first quarter of 2024.

All of these indicators make it hard to say whether or not we will face a recession in the not-so-distant future, but one thing is for sure, a recession will come again – eventually. In fact, some people are hoping that a recession comes sooner rather than later because it can have a cathartic effect on the market, redistributing pockets of inflated value and potentially setting the market up for another decade of uninterrupted growth and prosperity.

So, while a recession might just be a natural and necessary part of life, no matter how distasteful, the question remains of how good of an idea it is to buy a home shortly before or during a recession.

The answer? I would say it depends on how confident you are that you will be able to remain gainfully employed during a recession. If you are employed currently and qualify for a loan as well as have enough money saved for the closing and associated costs, then you can purchase a home in 2024. However, you’ll want to feel confident that you can still keep paying your monthly mortgage payments well into the future too.

If you decide that you are in a good position to buy a home even if a recession hits (especially if you are a cash-heavy buyer), then buying a home right before or during a recession can be a great opportunity!

The reason being that others may not feel as confident regarding the longevity of their current employment and the fact that this decrease in demand means lower home prices – allowing you to potentially score a good price on a desirable home, as well as, have strong negotiation power during the transaction in general.

In conclusion, there is absolutely nothing wrong with buying right before or during a recession if you can afford it! It’s just important for you to assess your personal risk as you would with any investment opportunity. In fact, many real estate tycoons advise buying during a recession because “buying the dip” can enable you to make significant gains as assets rapidly increase in value following the recession.

If you question that at all, just look to see what happened after the Corona Pandemic settled - home prices went up 16-20% in the Charlotte metro area! Most home owners who bought right before or during the pandemic are sure glad they bought when they did and many others are kicking themselves for waiting.