Is it smart to buy a home in an uncertain economy?
When the state of the U.S. economy is less than stable, there are a number of huge things that can be affected. Interest rates, money circulation, investments and the housing market are only some of the major areas uncertainty can affect which, for many, can make it seem like a gamble to make huge purchases like buying a home.
But uncertainty doesn’t necessarily mean it’s a bad time to make a large purchase. In fact, many people purchase homes during uncertain economic circumstances and end up coming out ahead. But in most cases, is it smart to purchase a home during economic periods of uncertainty? Well, the answer is – it depends.
Q: Do you have the money to invest?
A: Even if you’re presented with the real estate deal of a lifetime, you can’t smartly invest without having the money to make it happen. That means not going substantially into debt to make the down payment, having money to pay for your mortgage and taxes, and ensuring you can do all of this comfortably. Your mortgage will already be a substantial monthly cost, and all of these other things can certainly add up. Plus, with the added cost required to fix your home up, purchase any new furniture/decor, potentially higher utilities, and more, you’ll want to be sure you have the bankroll to make your home ownership happen without a hitch. Whether times are uncertain or not, these are pieces that are certainly within your control.
Q: Do you have the money to maintain a home?
A: The costs of home ownership don’t just stop at the house’s initial purchase. You also have to maintain your home. That means you’ll have to have money set aside for any repairs, any upgrades you’d like to make, utility costs, water consumption, and more. In short – owning a home is not cheap. Just know, going into it, that there are a number of costs and fees that you’ll need to pay throughout your home ownership, many of which you may not be able to call timing-wise. It can almost add another element of uncertainty, but as long as you have the money set aside to prepare for this, you won’t ever find yourself in a position where you’re coming up short.
Q: Do you have a set timeline?
A: For many, the timing of when they need to purchase a home depends on other life circumstances. For example, they may be going through a divorce where their current residence will be sold and they need to find a new one. They may be in a tight financial situation where they need to downsize. Or, they could be moving to a brand new neighborhood (or state) and need to purchase a house in a specific timeframe so that they’ll have a place to call home. If you’re operating within the restrictions of a specific timeline, the uncertainty of the economy can be a factor, but may not be the primary driver of whether you do or do not purchase a home.
At the end of the day, whether you should make an investment in a home (no matter when you’re looking) all comes down to your own personal situation. Things like rates and home prices are extremely variable, and will always change. But if you’re at a point in your life where a home makes sense (and you can comfortably afford it), then take the next step and start doing some research. Find a real estate agent you really trust and get a feel for listing prices in the neighborhoods you love. Connect with a lender to get an idea of how much buying power you have, as well as any changes you can make that could potentially result in lower interest rates and increased approval odds. Sometimes, uncertainty can be one of the best opportunities.
