When it comes to playing the property game, it’s generally good to try to buy low so that you can sell high. If you’re buying during a recession, though, you may need to think about more than just the price of the homes. In fact, you’ll want to tread carefully as the market undergoes an adjustment.
While it might seem like buying during a recession is an obvious choice because of the lowered prices, there are always potential pitfalls to the process. What seems like a surefire low price today might represent a high point for the next several months, putting a buyer into negative equity almost immediately. There’s also the fact that many homes won’t reach their lowest prices because they’ll be limited by the needs of homeowners with low equity in their own homes who are only selling because of current economic positions.
Getting a loan can likewise be more difficult during these times than you might think. Recessions often make banks less likely to lend money, especially in a market that’s as volatile as real estate. Though low rates are still around for the moment, it’s important to remember that the requirements for getting those rates can always change. It’s becoming ever harder to find loans that offer first-time buyers a reasonably low down payment and those who do qualify might have to jump through more hoops than in years past.
Caution should be the watchword for dealing with real estate during a recession. If the market is in a downward trend, you have to think about your long-term needs and how you’ll deal with the home potentially losing value during the short-term. You will also need to look at all the houses on the market with a close eye, as those who drop their prices quickly may not always leave their homes in the kind of condition a buyer would prefer.
With all of this said, a recession can provide a good opportunity to buy a home at a reasonable price. Make sure to get prequalified early and to be cautious about any deals that seem too good to be true. If you can avoid getting caught up in the rush of lowered prices, you might find a deal that actually works for you.