January 28, 2008
As economists like to do, they’re prophesizing on whether the economy will go into a recession. Some say yes, others say no. Some say there’s a 40% chance; others say the odds are 60/40. But the fact is that even the brightest economist, with the best data, can’t know for sure whether the economy will go into a recession, and – if it does – how long it would last and how severe it would be.
A recession is any period – technically a period of six consecutive months – in which the economy is actually shrinking rather than growing. Economic growth is usually measured by the gross domestic product (GDP), which measures the value of all of the goods and services produced in the United States. All of the latest numbers indicate that the economy is currently still growing – even though it’s growing at a slower rate.
Of course, the Fed’s taking steps to try to stave off a recession – or, at least soften it. Last Tuesday (January 22), the Fed surprised Wall St. and Main St. alike by cutting the Fed funds target rate by three-quarters of a percent at an unscheduled meeting.
Did you know that you, too, can take steps to protect yourself in any economy? Your individual actions won’t save the national economy, but they could save your personal finances. I came across a report the other day, from Consumer Reports Money Adviser that offered some good tips for overall financial health, especially important during times of economic uncertainty:
If you can wait to sell, wait
There’s no two ways about it: it’s a buyer’s market out there right now. If you’re thinking about moving, but don’t have any real pressing need to move now, you’ll be better off waiting until the market rebounds – which won’t take forever.
On the other hand, if you’re moving to an area with a similar real estate market – within the Greater Phoenix area, for example – if you wait to sell until the market has rebounded a bit and you can sell your house for a higher price, you’ll also probably have to pay a higher price for the home you move into. In that case, it’s probably a wash between waiting or going ahead and selling now.
If you’re thinking about selling your home now, check out this great report, 7 Keys to Selling in a Buyer’s Market at http://myphoenixmls.com/sell-in-a-slow-mkt.asp for information on how to succeed in selling a home in a slow market.
If you’re buying, be aggressive – but also be wise
Too many buyers got themselves into trouble as the real estate market heated up a few years ago. In the Phoenix area, for example, buyers found great deals on large homes in beautiful master-planned communities on the outskirts of the Phoenix area. They thought they were getting such a great deal, and the market was so hot, they could overextend themselves. And now some of them area in trouble.
Likewise, now is a great time to buy. If we’re not at the bottom of the market, we’re near it, and there are a lot of great deals on wonderful homes. So do consider this an opportune time to invest in a home. But also be wise. Remember to think about what you can comfortably afford – and stick to that. For a great report on what to do and not to do when you buy your next home, visit http://myphoenixmls.com/10-finance-mistakes.asp.
Comments(1)