Should You Sell Your Luxury Home Before It’s Too Late?
Are you worried about a possible recession that will force you to sell your luxury home? If so, you’re not alone. Thousands of people are aware that a recession could be right around the corner and home prices might start to fall.
Based on predictable trends, real estate experts agree that a recession is a possibility; their advice is to sell your home before the recession hits and do everything you can to prepare for a fast sale. However, not everyone needs to (or should) sell their home just because home prices might drop.
Reasons to consider selling your luxury home
- You’ll get more money now than during a recession. If the U.S. economy enters into a recession in 2020, you won’t have much time to sell your home for a decent price. If you wait too long, your home won’t sell for as much as you’d like and, eventually, it may not sell at all.
Selling your home while you can still get a decent amount of money is key. Once a recession hits, interested buyers may not have the cash to make the purchase.
- Rent might be cheaper than your mortgage. Still paying off your mortgage? How long will you be able to afford your mortgage payments during a recession if you aren’t working as much as usual?
If you foresee financial trouble during a recession, renting a house or apartment is probably cheaper than your mortgage.
- Your home is flawless and in a good neighborhood. Experts say the homes that sell during a recession are the “dream homes” that everyone wants. Dream homes tend to sell quickly at asking price even during a recession.
- You’re ready to downsize anyway. Have you been considering downsizing your lifestyle? If a recession really is around the corner, this is your chance to act. You can still live in luxury in a smaller home.
Reasons not to sell your luxury home
If you’re not keen on the idea of selling your luxury home, there are several good reasons to keep it off the market.
- Your mortgage is paid off. If your mortgage is paid off and you can afford to pay property taxes for years to come, you don’t have to worry about being affected by a recession.
- You have a large savings account. If you can live on your savings even if you never generated income ever again, you don’t need to sell your home.
- You’re not at risk for foreclosure. If a recession won’t create a financial hardship that could result in losing your home, don’t sell your house.
- Housing declines aren’t likely to be as bad as the Great Recession. You can expect to lose some money on selling your home during a recession, but it won’t be anything like it was in 2008. Unless you can’t live without the money, hang onto your home and be prepared to ride out the predicted recession.
- You might not get your money. When you sell a house during a recession, you’ll get far less money than expected. Selling a house right before a recession hits can be equally disappointing.
Say you sell your home tomorrow and you start receiving monthly payments. Five months down the road, you could run into trouble if the buyer suddenly can’t make their payments because the recession hit them hard.
Is it a good time to buy a luxury home?
Every home sold during a recession is also a home purchased during a recession. While selling a home during a recession has pros and cons, what about buying a luxury home? Is it a smart move for buyers?
The answer is yes and no. Just like selling a home during a recession, buying a home comes with conditions. For example, those who can afford to pay the mortgage regardless of their job status should be okay buying a luxury home during a recession.
Don’t worry yet – home prices might not fall
Although it’s been reported that home prices will fall alongside the stock market thanks to the coronavirus pandemic, that might not be the case. Some experts argue that the housing market might help the economy recover from the next recession, as it has in the past. If home prices do fall, they won’t get anywhere close to the seen in the last recession.
Should you sell your luxury home? That’s up to you. If you’re already living in your dream home, you may want to hang onto it for a while. It could cost you more to build a new home later on.