- The International Monetary Fund has slashed its global economic growth predictions due to the coronavirus
- Trade wars still exist
- State and international borders are closing/ closed
Recession or not, buyers need to make sense for themselves about whether or not they want to take advantage of the lowest interest rate levels in nearly 50 years. And, according to a realtor.com survey in late 2019, over 30% of Americans are not surprised about expecting a recession in 2020. 44% of unsurprised Americans indicated they would continue their house hunting during a recession.
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Sure, some Americans may have anticipated a 2020 recession in late 2019 but NO ONE anticipated a health pandemic nor did they anticipate explosive job losses, including perhaps their own, in 2020.
Even so, here are constant questions potential homebuyers ought to ask themselves:
- Have I got enough saved? Roger Ma, a New York-based financial planner and owner of lifelaidout suggests
- Having 20% of the home price saved in the bank for a down payment
- Having 4%-6% in cash saved for closing costs
- Having enough cash to cover 3-6 months of living expenses
- What kind of financing would I qualify for?
- Obviously, the better the credit you have, the better mortgage with the best interest rates and terms you will get.
- Ma suggests having a mortgage payment that is 25% below your gross income/month
- Now may be just the time to capture rates of just above 3% before they start going up.
- Are home prices in my local are being affected by the pandemic and/or the recession?
- Because inventory is so low, Fiona Petrie, executive vice president and managing director of RE/MAX Integra, expects modest price reductions. Petrie does not think home prices will fall anything as they did during our last recession.
- How long do I plan on living in the home?
- Home tenure matters. According to George Ratiu, chief economist with com, says that the longer you live in your home, the better.
- Ma suggests staying in the home at least 5-7 years.
- Compare 5-7 years with the near 13 years that most people stay in their homes today, according to the National Association of Home Builder.
- What does my local economy look like?
- Remember that the drivers for housing demand in a “normal” economy, not in this current pandemic economy, are a well diversified economy and a positive jobs outlook
- Remember this economy or anything else is not “normal” and give yourself a moment here.
- Finally, ask yourself, do I really do want to own a house
- Be totally honest with yourself…how important to you is owning a house in light of other goals you may want to accomplish financially.
Thanks to Erica Sweeney and realtor.com.
Also read: Buyers Flocking to 4 Cities with Affordable Land & Growing Salaries, Realities of Home Prices in New York State & Manhattan, Podcast: F-18 Fighter Pilot, Marine, LeGrand Elebash Interview | How To Win In Combat