is it good or bad buying and selling a house in a recession

Is Now the Right Time to Buy a House, or Should You Wait?

Is house hunting on your mind? Deciding between buying or renting is tough, especially with the ever-changing home prices and interest rates. Realtor.com advises purchasing a house during a recession if you are financially solid, while Forbes Advisor advises against waiting for one. 

What do you think? What is the right time to buy a house? There's no precise or universal answer. Your financial status and needs determine the choice. If low interest rates mean you can lock in an affordable mortgage payment, that's a strong argument for buying. But holding off could be smart if you think home prices in your area still have ways to drop or you need more time to commit to staying put for several years.

Key Highlights

  • 2023 was an undesirable year for real estate. Even with 20-year-high mortgage rates, economists predict a recession. 

  • Lower mortgage payments allow purchasers to afford a more costly property when interest rates are high. 

  • If you're concerned about job security or the economy, consider delaying home buying. Recession is 46% likely by September 2024. 

Should I Buy a House Now or Wait for the Recession?

Should you purchase a house now or wait for a market change? Several factors make this question difficult. However, loan rates remain low, and housing prices are affordable in many places. However, there are signs the economy may slow down soon, possibly reducing both rates and prices.

If your job and income feel very stable, and you plan to stay in the home long-term, buying now could still make sense. Locking in a low, fixed-rate mortgage will provide payment stability for years to come. While house prices may dip after you buy, they should rebound. 

Waiting may be best if a recession is coming or your income is at risk. Why rush into a significant financial commitment if job losses or pay cuts could make payments difficult? Sitting out the following 6-12 months might allow you to increase your down payment, watch the economy, and potentially locate better mortgage rates or home pricing. The option depends on your risk tolerance and buying time frame. Balanced thinking may be best for many. 

Buying a House Now Is Good If:

You have an excellent credit score. The best mortgage rates and terms will be available to those with high scores over 740. If your score is on the lower end, work to improve it before buying to save thousands on your loan. Timely bill payments and minimal credit card balances are two of the fastest strategies to improve your score.

Good Idea to Wait for Recession If:

Suppose you're worried about job security or the economy's stability. Holding off on buying a house for now may be better. Recession chances by September 2024 are at 46%. 

  • If you lose your job, lenders are less likely to approve your loan. Your income determines your borrowing limit. You most likely will only get approved for a mortgage if your income is consistent. 

  • The local real estate market may suffer from the crisis, even if it hasn't directly touched your neighborhood. 

  • Home prices may plummet and take years to recover. Purchasing at a time when prices are declining is often not a smart move. 

  • Less competition may help you locate a fantastic property and invest in your future. When the economy improves, you may acquire a mortgage and buy cheaply. 

Should first-time buyers delay buying a house?

Consider these pros and disadvantages of buying a house in the present market if you're worried about mortgage rates and pricing.

Consider delaying first-time home buying if:

  • Rising mortgage rates have raised substantial buying costs during the previous year.

  • First-time buyers risk losing money if home prices decline during the next two years.

  • You can be in negative equity if your home's value drops and you make a minimal down payment. This applies solely if you sell your home.

  • Holding out might result in a smaller mortgage loan and a lower minimum deposit requirement from the lender if predictions come true and real estate values drop.

  • Living with relatives and not paying rent may help you save for a deposit. Purchase a home to grow equity and decrease your debt. 

First-time homebuyers shouldn't delay homebuying if:

  • If you own a home, your landlord can't end your lease or raise your rent.

  • Upon vacating a rented residence, you must settle your mortgage.

  • Rent is going up.

  • You might have to wait a long time for house prices to bottom out since we are still determining how much they will decrease.

  • Undoubtedly, house prices will decline, but waiting could mean giving up a cheaper mortgage.

  • If you intend to remain in your house for three years or more, you may be able to weather the downturn in the property market.

  • Your danger of negative equity is reduced when you make a large deposit.

Being a first-time buyer may provide you an advantage over a seller who wants to sell quickly before rates rise the following year since you have no chain.

Should I Buy a House or Wait Until 2024? 

Buying a house is a major decision that requires careful consideration. It depends on several aspects. 

  1. Interest rates may climb in the coming years, lowering your buying power. Locking in a low rate today may save you money, as mortgage rates are at record lows. Many places are seeing rising home prices. Buying early saves money. 

  2. However, a recession in 2024 may lower housing values. Home values might plummet in a recession; however, it is improbable. Waiting to buy may decrease the price. Making a larger down payment with more time to save might lower your mortgage rate and monthly payments.

  3. Nobody can accurately anticipate the best moment to buy. Many things affect the housing market. If you're ready to purchase, purchasing in the next few years may be a bright idea due to low mortgage rates, sustained employment growth, and rising property values. Monitor economic trends and mortgage rates to decide the optimal moment for you. The choice is yours!

The Bottom Line

Buying a home is thrilling, but the timing is essential. It would be best not to rush into homeownership before you're financially or emotionally ready. Maintain a solid career, save, and pay off debt. You'll be prepared to acquire a mortgage and confident enough to make an offer when you locate the right house. The real estate market will always fluctuate, but having your finances in order lets you act when you choose. Your house awaits!

People Also Ask

Is the housing market going to crash?

Most likely not. Most analysts think the housing market won't collapse despite the current economic uncertainty. Although some communities may see a decrease in home values from the record highs they reached during the epidemic, it won't be disastrous; instead, consider it a gentle landing.

Will a recession lower home prices?

Many buyers might reconsider purchasing a property because the economy is unpredictable during a recession. As a result, sellers may be forced to drop their pricing and make concessions due to the decreased demand from buyers. The local market circumstances will determine the extent to which housing prices fall or rise.

Is it better to buy a house now or in 2024?

2023 has been a rough year for real estate. Economists forecast a recession despite 20-year-high mortgage rates. When interest rates are high, buyers who wait for lower rates may be able to afford a more expensive house due to reduced mortgage payments. Whether this is an excellent year to purchase depends on your position. If you must move, shop around for the best deal. You can refinance if rates fall.

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Douglas Allan 08 Nov, 2023

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