This Article Is About Buying A House During Recession For First Time Home Buyers
Buying A House During a Recession For First Time Home Buyers is one of the major concerns.
Most home buyers have heard of the 2008 Great Recession and Real Estate Collapse. Home prices have been rising for the past several years with no signs of correction. Both HUD and the Federal Housing Finance Agency (FHFA) have been increasing loan limits on FHA and Conventional Loans for the past three years. The increase in loan limits is due to rising home prices. HUD increased FHA Loan Limits to $331,760 for 2020. The FHFA has increased conforming loan limits to $510,400 for 2020. The Department of Veterans Affairs (The VA) has exempt loan limits on VA Loans recently. How much can home prices go? What goes up normally comes down. The question is not if a recession happens, but when will it happen. Will Buying House During Recession For First Time Home Buyers affect the finances of homeowners? How much will home prices tank?
Fears Of Buying A House During Recession
One of the greatest fears of home buyers is Buying A House During a Recession.
Many millennials may have not gone through a housing crisis, but heard horror stories of family members and/or close friends losing their homes and/or filing bankruptcy due to the 2008 Great Recession. Many potential homebuyers have been sitting on the sidelines for a housing correction. Unfortunately, home prices keep on increasing with no signs of even a slight correction. The government realizes this and has been increasing FHA and Conforming Loan Limits for the past 3 years. Recessions and fluctuations in home prices are a reality and do happen. History normally repeats itself. During the Great Depression of 1929, home prices took a 25% drop in value. Average home values took even a bigger hit during the 2008 Great Recession depending on where the home was located. The 2008 Great Recession lasted almost 10 years and was the greatest lasting recession in U.S. History.
Is A Recession Imminent?
A recession is a slowdown in the economy.
Recessions aftermaths include falling stock prices, inflation, lower unemployment numbers, high unemployment, falling home values, lack of consumer confidence levels. Historically, most recessions last 24 to 36 months. Buying A House During the Recession after home values fell is a good time to purchase affordable housing. However, the 2008 Great Recession lasted almost 10 years, which is not the norm.
Is Buying House During Recession For First Time Home Buyers A Good Move?
Nobody has a crystal ball and cannot predict how much home prices can drop during a recession. However, if there is a housing correction, it is a great time to buy. Home prices, in general, appreciate in the long term.
Tips And Advice Buying A House During Recession
In general, affordable homes up to $484,350 should not be affected too much when buying a house during a recession. People need to live. Average national rents to rent a 3 bedroom, 2 bathroom home will still remain at $2,000 per month which is the national mortgage payment average. It may take longer than normal to sell a home during a recession or slow the housing market. People affected during a recession are higher-end homeowners. Not too many people will be in demand to purchase million-dollar homes during a recession. If a homeowner loses their jobs and can no longer afford their home, banks often work with homeowners with either a workout, forbearance or loan modification. Increases in defaulted mortgages will affect home prices. Appraisers use comparable sales. If homes in a particular neighborhood foreclose, it often affects the value of your home as well. Again, nobody has a crystal ball. You cannot try to predict the bottom of the market. Many home buyers lost great buying opportunities because they were waiting for a housing correction. This never happened and the housing market took off. By the time potential home buyers are waiting for the bottom of the housing market, real estate values can be on the upswing.
For more information about the contents of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays. We are direct lenders licensed in multiple states with no lender overlays on government and conventional loans.
