People are stirring a conversation around another recession and you are not sure if this is the right time to buy a home. Let me put your thoughts to rest. It's absolutley the perfect time to buy a home if you are capable financially, especially if you are renting now. Recession doesn't mean housing crisis. The housing crisis was due to the poor lending strategies, lack of consumer protection and predatory lending. We have a hold on that now with so many guidelines impletmented to protect the consumer.
Let me create a scenario here. You've just started your career and union with your significant other and are not sure where you want to live, but you don't want to throw away money and rent the rest of your life. You're not sure if you are going to be at your current job in your current position for more than a few years. You know that your income will increase and you will ba able to afford more, in a few years. Right now, you are just starting out trying to make the best choices and sustain a happy life.
Food For Thought: Who Wins?
Let me suggest a short term goal that could put you in the best position later down the line. It's fool proof! Think about it from this perspective. Renting during a recession is the most lucrative situation for landlords, not renters. If people are losing their jobs, they are losing their homes. If people are losing their homes, the need for rentals increases. The price for rentals increase. Which would you like to be if this were the case, the renter or the landlord? Most likely you would want to be the landlord.
Action: Buy Your Investment Property First Not Second.
I'm suggesting you purchase a duplex or 1-4 unit property in your first experience of buying a home. If you wait to buy one after buying your first single home, it will be more difficult to purchase an investment property later. The reason is because of lending guidelines. You can buy a duplex or multi-unit property with as little as a 3.5% downpayment if choosing to live in one unit temporarily. If you buy it first, you are a first time buyer as long as you are occupying the property. First time buyers have many affordable options, so if you choose to do it the other way around and buy the investment later, you will be forced to save 20% for a downpayment to buy it. Banks want you to have 20% equity when buying an investment. How can you save 20% and have a mortgage at the same time? That can be difficult and may never happen.
You chose to purchase a duplex or 1-4 multi-unit home. You are working and maybe a recession hits and you get laid off. You listened an bought your investment first. The rent covers your mortgaeg payment enough to float you for a couple of months until you can find another job. You have money saved because all along your tenant was paying your mortgage. Your challenges are not that bad compared to living in a single home while being the one responsible for making full payment. Let's visit the scencario of actually saving money during this time and renting all of your units, making it easier to save 20% for your next home. Moving forward, your duplex has two rents. One that pays the mortgage and the other that pays most of your new mortgage. You put 20% down or more, so your payment is much less. You can afford more and so you buy a bigger home or a home in a better area for your future goals. You double up on payments and your home is paid in full as well as your investment down the line. In just a few years, you have set your future life of financial freedom. At any moment you can do it over and over again if you choose building wealth surviving any recession.