Buy-low, sell-high is the investing mantra we are all familiar with and, generally, that is a great rule of thumb.  However, when it comes to the real estate market there is a nuance to be aware of that will serve investors well if you are considering investing in a recession.

First, a short history lesson. During the last recession, there was a drastic fall in housing prices and foreclosures flourished. Now the threat of another recession is looming large.  A recent Zillow survey of real estate economists and experts found that half of them expect the next recession to hit in 2020. Most of those experts believe trade policy, a geopolitical crisis or the stock market will be the cause.

If and when the recession hits, you can be sure the slowdown will have an impact on the housing market.

Some may wonder if it’s a good time to invest.  After all, history would indicate that a recession means lower interest rates. But the answer isn’t a definitive, ‘Yes.’

There is a big difference between what ‘was’ and what ‘could be’ coming. The “great” recession was unique and unprecedented.  It took most of us by surprise and when it hit, it hit BIG! Housing was the anchor that pulled everything down with it.  Because of the dramatic downturn in housing, it was a very scary time to put money into the real estate market. So most people didn’t.  Those that didn’t have to buy or sell just stayed put.  In fact,  that was part of the slow recovery.  Buying and selling virtually froze.  

This forecasted recession is anticipated to be more like a predictable downturn.  What that means for residential real estate is that values are expected to just flat line or plateau but not plummet to the depths we saw in 2007, when the proverbial bottom dropped out.

One of the most important strategies to adopt if you are going to invest in real estate in a recession is to buy in key neighborhoods and neighborhoods that, regardless of overall economic health, have upside. Upside is a slang term for an upwarding trending value in the neighborhood that equates to future equity.  A neighborhood that has already turned way up and houses are priced high in comparison to the overall region does not have “Upside” 

5 Points Realty has been in the Charlotte market through the worst of times and the best of times.  We know from the inside the best neighborhoods to watch. 

We have been there before anyone else.  Here are a few of our top recommendations. 

Genesis Park – Walking distance to Camp North End and the new Heist brewing.  This neighborhood offers bungalows well under 200k 

Revolution Park – Also known as the Barringer neighborhood, this area is due West of uptown Charlotte, near Clanton park, a relatively new business district.

Washington Heights – North of uptown Charlotte has great new and established developments and really great price-point.  

We have more just ask us.  Our brokers are battle-tested and understand that recessions have cycles and each one has different factors to consider. Any of our agents would be happy to share their insight to help you make the most sound financial decisions for investing in real estate in a recession.