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Preparing for a Market Downturn


Posted: October 02, 2018 by Anna Jotham

As experts contemplate the possibility of a real estate market downturn, consumers and homeowners are beginning to think about next steps. And while market corrections are a normal aspect of the world of real estate, it is a natural occurrence that can cause concern among consumers. After all, how will a downturn affect your investment or home value? How can you position yourself to ride out the downturn or, better, use it to your advantage?

 

Market downturns: a launch pad for smart decisions on real estate

The housing market, like any other market, cycles regularly. Interest rates fall, interest rates rise, demand ebbs and spikes as buyers look to nab a great mortgage loan rate. Some buyers may be tuned in to the market chatter about a possible real estate market downturn, while some may be oblivious. Whatever the case, real estate professionals largely agree that investing in a home tends to be safe over the long term. But if you’re looking to leverage cash for some investments in the future, it’s important to be mindful about the market fluctuations. More, understanding these normal changes in the market can empower you when making decisions about buying, selling and renovating your property. Let’s examine how this can help you adjust your strategy.

 

Renovating

Experts say launching into a significant renovation during a down market is probably not your best move. After the housing market downturn, you run the risk of seeing your home’s value decrease, and your investment could be tied up for years to come.

In a down market, when you’re thinking of selling, you may be tempted to renovate your current property to make it more marketable. Yet putting tens of thousands of dollars into your existing home may be difficult or impossible to recoup in the short run, especially during a market downturn. It’s important to exercise discretion, and experts recommend during a market downturn that sellers stick to the small improvements like a fresh coat of paint, swapping out fixtures in the bathroom and kitchen, and focusing on landscaping to up that curb appeal. You’ll invest wisely with bigger hope for a return.

 

Selling

Thinking of selling? With experts predicting a market downturn, you could be facing an opportunity. After all, sell now and you could have cash on hand before the market downturn. That could allow you to make a wise investment that meets your needs—with the trusted advice of your Realtor, of course.

 

Buying

In the wake of every downturn there is historically a decline in interest rates. That means it’s prime time to think about buying real estate. As a homeowner, you may want to consider selling now, paying off your mortgage and renting something modest for a couple of years. In the short term this can increase your cash flow and allow you to invest in better performing assets. Of course, you would want to avoid, if possible, purchasing a home at a high interest rate.

 

Market downturns and your real estate investments

In a real estate market downturn, it can be natural to feel anxious. Just know that downturns are a normal part of the market lifecycle, and it’s all about making informed decisions that meet your goals and needs. Consult with your trusted Realtor to guide you through the process every step of the way.




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