It probably comes as no surprise that we are officially in a recession. After all, with businesses closed for months and millions of people out of work due to the COVID-19 pandemic, economic impacts were unavoidable. If you were planning on buying or investing in real estate this year, however, you may be wondering how this recession will impact your plans. Well, to get an answer to this question and decide whether buying a home still makes sense, you need to spend some time researching these five real estate essentials.
Home Buying Guides
Whether you are looking for your dream home or your first investment, it never hurts to have a little help along the way. Before you start searching for properties, spend some time online reading through tips and guides that will help you avoid mistakes. For example, if you will be buying your first home, this first-time homebuyer PennyMac guide can help you decide if you're really prepared to own your first home and which steps you need to take to turn your dreams into a reality. First-time real estate investors may need to think about a few additional steps, but they can also use many of the tips in the home-buying guide from PennyMac.
Current Home Prices
A recession may be bad news for the economy as a whole but it can be a good thing for home prices, especially for buyers and investors. During a recession, home prices tend to go down, which means that you could end up snagging your dream home or first investment property for a lot less than you would have paid last year. Now you do need to keep in mind that home prices can vary by location, so you should research current prices for properties in your desired area. In fact, you may want to use a real estate website to keep track of pricing trends in your market.
Mortgage Rates
Another perk to investing in real estate during a recession is being able to take advantage of reduced interest rates. The Federal Reserve drops interest rates during a recession in order to boost the economy, and this can make buying or investing in a home much more affordable. In order to take advantage of these low interest rates, you will still need to make sure that your finances and credit are both in good condition. The financial steps mentioned in the home buying guide above can help, but you can also research tricks for boosting your credit quickly.
Real Estate Trends
Home prices are only one part of the equation when it comes to figuring out your local real estate market. You also need to determine whether the market is a buyers or sellers market to figure out how aggressive to be with offers and negotiations. If you're not familiar with these terms, you should know that a sellers market means that the market will be more competitive for buyers and investors. So you may need to make an offer for the asking price or higher. The opposite is true for buyers markets, and a recession may result in more of the latter.
Real Estate Agents
Even with all of these tips, resources, and guides, buying or investing in real estate can still be a very complicated process. This is why, instead of spending all of your time working things out on your own, you may just want to work with an experienced REALTOR®. Real estate agents have access to the most accurate and current market information, so you won't have to worry about setting reminders or reading through countless websites. So before you take any other steps towards finding and buying your dream property, be sure to connect with a local REALTOR®.
As long as your income and credit have not been affected by the COVID-19 crisis, buying a home during this recession may be a very smart move. In addition to lower mortgage rates, you may also be able to find a really good deal on your dream property. Just be sure to start by hiring a reliable and knowledgeable real estate agent to guide you through the process!
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