The current real estate market can feel like it is impending doom due to various economic factors. In reality, the real estate market in 2022 is seeing a rebalancing coming with necessary adjustments to make for an overall healthier market. What do these adjustments mean for you as a real estate buyer? Look no further for our top tips on how to navigate a real estate recession as a buyer.
As a buyer, know that you can feel confident in navigating any real estate market with the help of a trusted agent. Find an agent today to guide you through your big purchase.
Comparing to 2008
The market today is worth comparing to the housing market crash we experienced in 2008. Many professionals state they don’t see what we are heading into to be as devastating as the recession in 2008. Some 14 years ago, homeowners were lacking in equity which led to risky lending and mass foreclosures. That is not the environment we are in today. We are however seeing a shift in the market that could be leaning into recession territory.
What does this mean for buyers?
Some buyers are reluctant to make the purchase with interest rates on the rise, but this shouldn’t be what is stopping you. Professionals say it’s best if you’re thinking about buying to buy now. Interest rates fluctuate. There is always an opportunity to refinance and get a lower rate in the future, while there won’t always be the increase in inventory we are seeing today.
As the tides are changing, bidding wars are becoming a thing of the past. Sellers are all jumping into the ‘sell now’ mantra, leaving a boom in inventory and lowering home prices overall. This means it’s a good time to buy.
How long will this recession last?
If we find ourselves in a housing market recession in 2022, the duration of the downturn is difficult to pinpoint. Historically recessions last around 10 months on average, but this is just that, an average. If we look at the recession in 2020 due to the pandemic, unemployment rates spiked, but overall, this recession lasted only a few months. In comparison, the great recession in 2008 lasted about 18 months.
Prepare for the storm
Whether you plan to buy a home right now or not, there are some practices you should put in place to help you weather the storm. It’s always a good idea to review your current budget and know that you are living within that budget. The best way to do this is to list your monthly expenses and compare them with your income. Be sure to include spendings like online shopping, entertainment, and money for savings on top of your regular bills. During this budget review, find areas you can cut back on and implement the changes.
Work your hardest at eliminating any high-interest debt you may be carrying and continue to invest in the stock market and 401(k) accounts. Lastly, work to increase your ‘rainy day’ savings account so you have a cushion during the pending recession.