The Business Cycle and Buying a Home
Recession and Expansion
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 houses.
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. 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.
In the
business cycle of real estate, there are buyers' markets and sellers'
markets...and some markets in between. It is all based on supply and/or
demand.
