By Rachel Nunez
A recession does not seem to be an ideal time to buy property. In fact, considering the U.S.’s Great Depression of 1929 that lasted for an entire decade, with World War II ultimately serving as an economic stimulus for the nation, it showed that recession could be a good opportunity to buy a property. While all recessions since that one have created various devastating results for the U.S. economy, they have also created prime times to purchase real estate. Here are some helpful real estate shopping tips, during a recession:
In some cases, you should quickly buy property in a recession
In various situations, you should sell your property as soon as you can. If you can use a temporary housing situation, sell your home now. If you can sell your home quickly and then purchase another one, the savings from the sale will significantly offset the loss from selling your home in a recession. If you want to upgrade to a more expensive home, you should consider doing it now. Within time, that more expensive home that you have your eye on could simply become more expensive as the recession starts to end.
1. Factor in interest rates
It is important to factor in interest rates, when doing your calculations. In particular, consider the trend in interest rates. Keep in mind that each 0.5 interest rate increase translate into your purchasing power dropping by $25,000.
2. Factor in the original cost of the house
When selling your home, do not merely factor in the selling price of your home; also consider the price that you paid to buy it. Remember that in the long-term, property values tend to increase. Thus, even when considering losses in the sale of your home, it is highly likely that you would turn a profit by selling your home during a recession-even before buying a new one!
3. Consider how demand affects the sale of your home
The primary drawback regarding the housing market in a recession (including Carlsbad Real Estate), is the selling of homes. Primary supply-demand factors include fewer buyers and more available houses. Thus, you must do the math to determine precisely how much of a loss you would experience, by selling your house in a slow housing market.
4. Factor in the savings of buying a new home
In a recession, whichever percentage of loss you experience in the sale of your home, will generally apply in the purchase of a new home. Thus, here is where buying a more expensive home than your current one, becomes a factor. The higher cost of the home you buy, including Carlsbad Real Estate, will result in a higher profit margin.
5. Compare interest rates and purchase prices
Waiting for interest rates to further drop, could result in the perceived value of properties to drop subsequently.
Buying and selling property during a recession can be a wise decision. However, it is important to focus on your particular situation. Do the number crunching to determine if a downturn in the housing market can create an upturn in your life!
About the Author: For more tips and information about Carlsbad Real Estate, check out mycarlsbadrealestate.com/2008/12/19/carlsbad-real-estate-6-vital-factors-that-can-influence-your-homes-value-during-a-recession/.
Source: isnare.com
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