Recessions are typically accompanied by real estate downturns as the economy slows. A recession can cause mild or severe real estate reactions (as in 2007). As of today, economists believe the next recession will be mild. Of course, that could change, but for now, they feel that current market forces do not indicate a huge real estate crisis.
Still, given that we can see a mild recession coming, it pays to do a few things, starting now. Trim high-interest rate debt, such as credit cards and other loans, so you can weather a potential job or income loss. Reducing debt will reduce your stress and free up cash for other uses. If you rely on investments for income, discuss protective measures with your financial planner.
But what about the mortgage? Clearly the more equity you have in your home, the better. But if you have a low interest rate loan on your home, using up cash to pay it off might not be the best use of your money. Still, it’s situational. For instance, if you’re nearing retirement, you may feel more secure in a paid-off home. To help you plan, you can call me to discuss your property value and selling vs staying.