Given the current state of affairs both domestically and globally, homeowners, and would-be home buyers, are naturally concerned that a recession is imminent. Sadly, most experts believe there is not enough information to accurately state whether a recession is coming; the coronavirus pandemic throws uncertainty into the way the market is behaving (e.g., will the market rebound completely, or is the virus masking something fundamentally wrong with the market as a whole). What can be said for certain, is that economic growth is slowing down significantly. To that end, the International Monetary Fund (“IMF”) has downgraded their global projections for economic growth. As we have suggested previously, the prudent buyer may come out of this unscathed; but here are a few questions you need to ask yourself before even trying to be a prudent buyer in these times.
Do I Have A Sufficient Amount of Money in Savings?
Like it or not, the coronavirus is bringing business to a grinding halt, and that throws job stability into question. Therefore, it would be unwise to purchase a home if you don’t have enough saved to cover 3 to 6 months of living expenses if everything falls apart. Additionally, you will want to have about 1/5th of the homes price in the bank for a down payment, which will lower your mortgage payments (those are included in your 3 to 6-month calculation).
How Long Am I Planning to Own This House?
The bottom line is that flipping houses is not a great idea right now – sure, mortgage rates are down, but with the economic uncertainty it’s not clear people will be clamoring for your property after you fix it up; ultimately, home values will see a short-term decrease. The short-term decrease is artificial, but it will take time to rebound. Therefore, if you are planning on holding onto your new home for a few years, now is an excellent time to buy (provided you have enough saved).
At the Chernov Team we understand that knowledge is power, and knowledge of how to navigate these trying times is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov team always leaves the table with the most.
