The new year brings new predictions of an economic downturn in 2023. A survey of 30 economists by Bloomberg in December 2022 found there is a 70% likelihood of a recession in 2023. Predictions vary as to the severity and length of a recession if it happens at all.
What are the advantages for first time home buyers entering the housing market at this time?
The past two years have been a sellers’ market. There were bidding wars with buyers paying thousands of dollars over the list price. While interest rates were at historic lows, the competition for properties drove prices up making it difficult and sometimes impossible for home buyers to purchase a property.
When there is a recession, home prices typically drop resulting in fewer buyers in the market. With less competition for properties and lower prices, it could be an excellent time to find the right house at the right price.
Before you buy a house, assess all the factors that weigh into the decision, such as:
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The climate of both the real estate market and the local economy
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Your financial situation and long-term job stability
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Your savings and home affordability
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Any first time home buyer financial assistance programs for which you may be eligible
Do Your Research & Ask Questions
To have the best home buying experience, take advantage of home buying classes and learn the steps of the process. Meet with a local lender and exclusive buyer agent to gain knowledge so you can move confidently ahead with buying a home.
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What is the best price range for my home search?
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What is a down payment, earnest money deposit and what are closing costs?
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What is principal, insurance, taxes and interest in a mortgage?
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What is an HOA, condominium or cooperative fee? What do the fees cover?
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How do I know what price to offer for a home?
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What are contingencies in a sales contract? Which contingencies do I need?
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If I buy a home with a partner, how do we hold title to the property?
Meeting with an experienced exclusive buyers agent will prepare you for buying a home whether there is a recession or not. Since exclusive buyer agents only work for home buyers, you will have a trusted advocate by your side. THEY’RE CONTRACTUALLY COMMITTED TO WORKING IN YOUR BEST INTEREST so you know all the facts before making a decision.
Get a Handle on Your Finances
A lender will pull your credit and discuss your home buying options. Since there are many loan products and programs, you’ll want to meet with an experienced lender who can help you choose the best program for you. In addition, if you meet certain criteria, you may qualify for a low down payment loan or a first time home buyer program.
When Is the Best Time to Buy a Home?
SEASONALITY MAY AFFECT HOME PRICES AND INVENTORY. Working with a trusted buyer’s agent, you’ll determine the right location, lot and property to meet your needs. A buyer’s agent will determine price trends, prepare a comparative market analysis and offer advice on how to structure an offer for a home. The offer would likely include contingencies which provide you with additional protection in the contract.
But the bottom line, as Melissa Cohn, a regional VP at William Raveis Mortgage notes, “…WHEN YOU FIND THE RIGHT HOUSE AT THE RIGHT PRICE, IT’S ALWAYS A GOOD TIME TO BUY.”
If there is a recession in 2023, it’s likely HOMES WILL BE MORE AFFORDABLE.