Is It Wise to Buy A House During a Recession
It’s well known that the housing market is heavily influenced by the economy. When the economy is strong, people have more money for large purchases and investments in real estate. When things are tighter, though, a lot of prospective homeowners may start to ask whether they’re really ready to take on such a potentially large debt.
If you’ve been thinking of buying a home, you might be wondering about this yourself. How will economic problems, or even a recession, affect your home purchase? Will the local housing market all but grind to a halt? While it’s good to keep questions in mind so that you aren’t taken by surprise, the chance of a recession or other economic downturn having a profound effect on your home purchase is relatively low.
What Is a Recession?
A recession is a downturn in the economy that lasts for at least six months. Typically during a recession you’ll see both trade and industry take a hit, and the gross domestic product (the value of the goods and services produced over a period of time, usually called the GDP) fall for at least two quarters in a row.
A recession can last for quite a while and can result in a significant slump in the economy that takes months or even years to recover from. An example of this would be the Great Recession which lasted from 2007 to 2009; its fallout lasted for years in some places and caused a number of significant problems for several sectors of the economy.
Will the Housing Market Collapse?
It is June 2020 and we are officially in a recession. Yet the San Ramon real estate market is flourishing. I say that because there are multiple offers on homes. The historically low interest rates are driving buyers to take advantage of this situation.
A downturn in the economy might slow housing sales in some areas, especially early on as both buyers and sellers wait to see whether the economic turmoil is going to last long-term. In most cases, though, this slowdown will only be temporary and will not affect all parts of the country equally. In some cases, it can even result in unmatched opportunities for buyers who are willing to act.
There may be many reasons not to buy right now due to the uncertainity of what is happening to our economy yet there are just as many reason to buy a house. Only you know what is best for you and your family.