Home Sellers Can Prepare For A Recession
Home Sellers: Over the past couple of years home prices across the US have reached all-time highs, however, many experts are now predicting that a correction in the housing market is near. Regardless of your knowledge of finances and economics, read on to understand how this can impact the sale of your home.
At a high level, the National Bureau of Economic Research (NBER) defines a recession as when there’s a significant decline in economic activity across industries that lasts a few months. While we’ve seen a decline in economic activity over the past few months, many experts are aligned that the housing market won’t implode as it did in 2008.
The main difference between then and now is in the past homeowners had little equity in their homes, which meant that there was a surge in foreclosures due to risky lending practices. Today, homeowners are in a position to sell their homes for a profit.
Since World War II, economic recessions have generally lasted 10 months, however, every recession is different so it’s impossible to predict the exact length of the coming recession. The Great Recession of 2008 for example lasted 18 months.
With storm clouds on the horizon, now’s a great time to update your financial plan if you haven’t done so recently. For example, if you’ve been investing for the past few years, it’s important to make sure your investment allocations are aligned with your investment horizon. If you’re young and don’t need to cash out for a couple of decades, you can continue to invest in high-growth stocks. If you’re nearing retirement or want to bolster your emergency fund, now is a great time to buy more conservative investments such as bonds.
In addition to reviewing your investment portfolio, you also should review your budget. Ensure that you’re currently able to pay your credit card bills in full, and if needed, eliminate discretionary wants that aren’t essential.
Many top-performing real estate agents are advising homeowners to remember the real estate industry is personal, meaning homeowners generally sell when their lifestyles change, regardless of what the economic climate is like. Still, the current uncertainty in the housing market is causing many homeowners to sell, which in turn has caused prices to decline. Generally speaking, homeowners are still profiting from sales. They’re just not making the astronomical amounts they did during the pandemic.
Remember that downturns come and go and that being intentional about focusing on managing stress is invaluable for maintaining stability. Going back to the earlier point about reviewing your finances and budget, you may want to speak with a financial planner who can provide an objective view of your situation and ways to improve.
Similarly when it comes to selling your home, getting expert help is essential to successfully selling your home. Experienced real estate agents know the ins and outs of their markets and can help with negotiating a fair price for your home, and also offer tips to help it sell faster. Click here