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The Business Cycle and Buying a Home in the Mobile AL Area

Posted in: Buyers
By Lucinda Briggs

Recession and Expansion

The Mobile AL home market moves logically.  There are times when the economy is brisk and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, buy new cars, and...
 ... They buy new homes in Mobile, or Eastern Shore and Gulf Shores homes.

Then, for one reason or another, the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession.

During such a time, fewer people are buying homes in Fairhope, Daphne, Spanish Fort or Mobile. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment - perhaps because of a layoff in the family.

Supply and Demand

When the supply of available houses is greater than the supply of buyers, appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties.

If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will begin to show strength again. At times, real estate values may even surge drastically. In many regions of the country, this is precisely what occurred in the late eighties and nineties.

Should You Try to "Time the Market"?

One problem with attempting to time your purchase to the business cycle is that no one can accurately predict the future. Another challenge is that interest rates are generally higher during a depressed market and income may not be keeping up. For that reason, fewer people can qualify for a home purchase than in more prosperous times.

Plus, this strategy generally works best for first-time buyers. People who already have a home usually need to sell it in order to buy their next one. If a "move-up" buyer wants to buy a home during a depressed market, that means they usually have to sell one during the slow market, too. If a seller wants to sell his home to take advantage of a "hot" market when prices are fairly high, they generally have to buy their next home during that same hot market. It tends to equal out.

For more information about property on the Mobile Bay and metropolitan region, contact Lucinda Briggs of RE/MAX by the Bay, at (251) 423-7127.

   

Parker CO

Lucinda Briggs
Re/Max By The Bay

Office
251-621-2588
Fax
 
251-625-3325
Cell/Text
 
251-423-7127

lucinda@lucindabriggs.com


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