Last Updated on August 15th, 2022. Original: August 2nd, 2022
What follows is an overview of the factors that affect whether you should purchase a home during a recession. During a global recession and rising inflation, many factors influence if it is advantageous to purchase.
Pricing is the most crucial factor to consider, especially when mortgage rates are on the rise. Two key components to your decision will be your personal ability to weather the recession (i.e. income stability, credit, debt), and secondly whether you can purchase a property in your desired marketplace at a good enough deal that your equity can realistically grow during the time you expect to stay there.
While the purchase price of the house is what market buyers are willing to pay for it, pricing also depends on the size of the property you want to buy and its location. A large family might enjoy a home with four bedrooms and two bathrooms but would not be interested in a house with only one bedroom and one bathroom. On the other hand, if the family is small, they might be willing to buy a home with only two rooms and one bathroom. Who is the primary buyer in your market of interest?
Of course, when you decide on the purchase price of a home, you must also consider the type of loans available and how that affects your bottom-line. The higher the interest, the better pricing concession you will need in order to meet your housing budget.
In summary, several factors to consider when purchasing a home include:
Purchase price low enough for equity growth
Market area to suit your needs
Location and expected area growth
Size of your down payment & loan amount
Personal income stability
Current debts/Credit history
Mortgage loan you can qualify for to meet housing budget
The purchase price reflects the local area's market inventory, location, and future growth potential. These factors are as important as finding out about the area, schools, and local amenities. Example: If you are moving from Orange County to Riverside County, recognizing the local amenities in one place may require you to drive to another city or pay more to purchase close to your preferred shopping, dining, or school locations. Also, in the example of Inland Empire, the market for increased inventory of new homes continues to show growth due to the open land and continued commercial developments. So, there may be more market opportunities to explore from resale homes due to added new home inventory during a slowdown.
The best place to start is to evaluate what your prime home loan options are so that you can determine the right purchasing price to target. Whether you are a first-time buyer or a previous/current homeowner, A+ Home Loans can assist you in understanding all these factors. Fill out the Purchase Request, and A+ Home Loans. We will help you on your journey to purchasing your next home.