The housing market has been pretty strong the last year or so, but with the pandemic hitting, we might be on our way to a bear market. But don’t let that discourage you from buying a home. There are some benefits to purchasing a home even in a bear market.
What is a Bear Market?
First, let’s explore what a bear market means. This is where there is a decline in the overall market, usually seeing at least a 20 percent decline for 2 months or more. Pretty much, it is a recession, when the economy stops growing.
Benefits of Buying in a Bear Market
Yes, they’re quite a few benefits to buying a home during a recession, especially if you are presented with the right price! In fact, homes can often be found at a better price during a bear market.
If you are financially smart and have enough money saved, it is definitely worth taking advantage of decent real estate prices. Some fear that a recession will impact the real estate industry and even though that is a high possibility, it may not impact real estate prices.
The demand for homes does decline in a recession, leading to home prices to fall. So, those that are financially stable should consider purchasing a home during this time. Especially since the competition will be low from other buyers.
The last time we saw a recession was in 2008 when we saw home prices decline by 25 percent. It doesn’t look like we will be seeing that big of a fall anytime soon. However, we may see lower mortgage rates and interest rates, which are usually common in a bear market.
During a recession is also the time to see how much bang you can get for your buck. Meaning, you can try to ask for extras like add-on furniture. Plus, sellers are more likely to negotiate in a bear market.
Are There Cons to Buying a Home in a Bear Market?
Just like with every decision, there are some cons. A recession often puts your job in jeopardy, so your job security is not very secure, leaving you not financially secure either. This can make it hard to keep up with payments.
Banks are less likely to lend money during a recession as well. And even though competition from other buyers will decline, competition from investors will rise.
Using a Trusting Realtor
If you are in the right position to do so and find a great deal, you never want to pass it up. While you are looking for a new home, you should always consider working with a trusted realtor. Especially if you are looking to move near a military base. Realtors near Luke AFB, like Julia Calza, can prove the guidance and support you need to relocate. Julie Calza is known to serve active members, reserve members and DOD affiliates at Luke Air Force Base, offering advice and knowledge on the process of buying a new home in the area. If you need help using your VA loan benefit, Julie Calza will also be able to offer assistance as well.