The Business Cycle and Buying A Home

Recession and expansion influence all types of business. Each helps determine the products you buy, how much, and even whether you purchase anything at all. All aspects of business are affected and real estate is certainly no exception.


There are many factors that go into determining the best time to buy a home. Obviously, you want to buy during what is known as a “buyer’s market”. This is when lower offers are most likely to be accepted. Though this may not come around often, it is something to consider when you first begin your search.


When the economy, people generally feel confident about their money situations. During these times, purchases are made without much deliberation because many aren’t concerned about losing their jobs and going into extreme debt. On the flipside, when the economy is down, the opposite is true. People usually don’t make purchases and are very careful about how money is spent.


If the economy is up and you are looking to sell a home, you will stand a good chance of coming out on top. You will be able to ask the price you want because you know someone out there will probably be willing to at least come close to paying it.


When the economy is suffering setbacks, people are less likely to make a huge investment, thus entering into a debt they may or may not be able to pay off. They may, however, be in the market for a home. When this occurs, the seller may wind up having to accept an offer that is much less than the actual asking price would otherwise be just to make the sale. The buyer wins here all around because the final price for the home won’t be as high and neither will the monthly payments.


While it isn’t always necessary to sell a home during an economic downturn, there are many reasons why some people may find themselves needing to sell. Perhaps the family is growing and more room is needed to accommodate the situation. Maybe one or more family members have experienced a job change and it has become necessary to change locations. Others are unable to continue making mortgage payments either due to job layoffs or high bills that have become unaffordable. Whatever the reason, it is sometimes necessary to sell at home at a lower price just to get rid of the debt.


The buyer can benefit greatly from purchasing a home in a “buyer’s market” for several reasons. The obvious is the lower cost and lower monthly payments. A fixed mortgage rate will enable the buyer to continue enjoying those lower monthly payments even when the economy begins to incline once more. The buyer may also be able to get more square footage and premium property for a lower price. This would be a great choice for families who are looking for a larger home, but can’t really afford the higher cost.


Before you buy a home, consider the current state of the economy. Weigh all your options carefully. Talk to realtors about the market and make your decisions based on the information you gather.  

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