Worried About a Possible Recession? Experts Agree Real Estate is a Good Investment

Blog posted On December 27, 2022

If you feel like we’ve been on the edge of a recession for months, you’re not alone. More big names are warning Americans of an impending recession – Jeff Bezos, Elon Musk, and most recently, billionaire David Rubenstein. Alongside these names is the majority of Wall Street. While investors may have different ideas about the best stocks for a recession, most agree that one investment is almost always a smart, recession-proof move.

Purchasing real estate as long been heralded as a great way to diversify your investment portfolio. But ever since the Great Recession in 2008, people have been more cautious about buying a home – especially during periods of economic uncertainty. However, for the past 43 years, real estate has proved itself a resilient and strong ally amidst different economic situations. “Between 1978 and 2021, there were 10 distinct years where the Federal Funds rate increased,” says investment management company, Invesco. “Within these 10 identified years, US private real estate outperformed equities and bonds seven times and US public real estate outperformed six times.”

Forbes magazine also asked experts if they thought homeownership was a smart investment. “The majority (57%) said that buying a house is a good investment, while 38% said it depends on certain factors and just 5% said that buying a home is not a good investment,” writes Forbes contributor Natalie Campisi.

But why? Why is homeownership considered a ‘good investment’?

1. Home equity

No matter what, no matter the economic condition, you’re earning wealth with every mortgage payment you make.

2. Home prices/rates

During a recession, it’s typical that mortgage rates and home prices trend lower. And just like most other investments, it’s good to buy low. Then, your earnings or home appreciation has even more potential.

3. Our mortgage products

We have the tools to help you maximize your home wealth – no matter the economic condition. From the All In One Loan to Rate Rebound, we know how to help home buyers and owners in every cycle.

4. Owners have higher net worth

According to the Federal Reserve’s 2020 Survey of Consumer Finances, homeowners have greater net worth than renters -- and not only the owners of multimillion dollar mansions. Renters gain no equity or any homeownership benefits, with all (or most) of the same monthly cost. While homeownership has higher upfront costs, we have several ways you can purchase a home with a lower down payment.

We understand that purchasing a home is a huge financial decision – maybe the biggest of your life. But most of the time, it can benefit you greatly. Of course, it’s important that you’re financially ready, which is why we recommend talking to your financial advisor before any big financial moves. After that, we would love to talk to you about your options and how we can help.

Sources: CNBC, Investopedia, Forbes, Money, Yahoo Finance, Yahoo Finance