With markets remaining volatile following President Trump’s announcement of new tariffs earlier this month, Redfin’s Economics Lead Chen Zhao outlines what buyers, sellers and renters should be considering during periods of economic turmoil.
Buyers
- Make sure you feel financially comfortable with your purchase. This isn’t a good time to stretch to buy a house. The macroeconomic situation is very fluid, but the odds of a recession in the next year sit around 50% and a persistent trade war will only increase those odds. When calculating how much money to spend, consider whether you have enough money in your emergency fund to cover mortgage payments if your family faces job insecurity.
- Negotiate, negotiate, negotiate. The market continues to evolve in favor of buyers over sellers. The gap between listing price and sales price is growing. There is likely more supply than demand. Continued macroeconomic weakness will only exacerbate that trend.
- Shop around more than usual for a better mortgage rate. Mortgage rates are more unpredictable right now than at any point in the past few years, so don’t get too hung up on trying to time the market. If rates come down significantly post purchase, you can refinance. Talk to your loan officer about “float down” options, post lock-in.
- Consider selling your current home before you buy a new one. While the logistics may be difficult, by selling first you will know how much purchasing power you have and you won’t be left carrying two mortgages simultaneously.
Sellers
- Price your home correctly for a shifting market. Home prices are remaining steady in most markets, but sellers are increasingly pricing too high and having to drop their prices. Be open to negotiating on both the price and non-price terms, such as agent compensation, furniture and repairs.
- Be prepared for deals to fall through. If financial market turmoil continues and spills into the labor market, buyers may experience sudden shifts in their ability and desire to go through with a purchase.
Renters
- Be prepared for rental demand—and possibly asking rents—to increase. If the housing market continues to slow, there may be more people choosing to rent instead of buy. That demand will potentially lead to an increase in rent prices. Having said that, there is still a lot of rental supply coming onto the market, so if the rent increase at the time of renewal is higher than last time, consider looking around for other options.
- If you’re choosing to rent rather than buy until the economy settles, think carefully about what to do with your down payment money. There are a range of investing options, from stocks and bonds to CDs and money-market accounts. Make sure the amount of risk you take on matches your investing horizon. If you potentially want to use that money in a year or two, don’t take on too much risk, because markets might be down when you need the money.
