What does a recession look like for real estate?

For most of us, just hearing the word “recession” brings stress and a feeling of uncertainty. The “Great Recession” which ended about 10 years ago brought untold financial loss to many, leaving them homeless and jobless. Recently, however, there has been much talk about a slowing economy, softer real estate market and potential for a recession. If that is true, what we can expect?

A recession usually turns real estate into a buyers market. Prices are softer, perhaps even decreasing some, since the the economy adjusts and even corrects after years of having an upward trend. Because spending usually slows down by the average consumer, the general economy slows down. Homeowners who need to sell their properties may reduce their price as a result to generate a buyer.

However, if you have a rental property and no need to sell it, you may be able to weather the storm. Rental prices may become softer to a certain degree, however, real estate is a commodity that everyone needs.

And even during the great recession, most rental properties ended up leased. So, rather than trying to sell your property, you may be able to weather the storm of a recession and wait until the market improves and see both rental prices and resale values climb, perhaps to a new high that you weren’t expecting. At the same time, you may find real estate values attractive to the point of purchasing another rental property or finding another primary residence for yourself and leasing your existing home.

Many investors capitalized during previous downturns. Perhaps you can be one as well!

 

Contributed by Nicklin Property Management.

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