Homeowners could be in a tough spot as GDP continues to drop for the US, and fears of a recession are becoming more of a reality now that data of the US economy shrinking by 1.4% annually in Q1 surfaced.
Roger Ferguson, the Fed’s former governor, issued a statement in a recent press conference, claiming that a recession is „near-inevitable” at this point, expecting it to strike as early as 2023, with little the Federal Reserve can do about it.
However, the good news for the consumer body is that they at least have time to prepare, as opposed to the short-lived recession that struck the US when the COVID-19 pandemic became a global threat.
A recent Goldman Sachs report shows that the odds of a recession starting this year were as low as 15%, meaning there are more than 6 months of leeway for you to get your finances in order before the clock ticks 2023.
Most experts believe you should right-side your finances in times when a recession is inbound, and this usually involves paying off any debt, or at least trimming it down somewhat, but high-interest debt like credit cards concerns these financial advisors the most.
The housing market remains strong
The housing market has a certain dynamic it upholds even during recessions, which was evident when the housing prices refused to drop at the beginning of the COVID-19 pandemic despite the market coming to a halt.
In fact, home prices actually rose through the economic crisis, ultimately reaching the fastest pace of growth on record in spite of the pandemic’s tight squeeze on the economy.
However, there are, once again, signs of home sales reaching a downturn as future homeowners struggle to keep up with the rapid increase in mortgage rates which have sidelined many prospective buyers in the current housing market.
What this all means for anyone still paying off a mortgage is that making their payments ahead of schedule will spare them any future monthly payments that may come, a thing many financial experts hold to be guaranteed in the world of finance.
Removing large monthly payments from your schedule can lift a heavy burden off your finances, especially if one is left jobless or suffers some other form of income loss.
It’s exactly what drives homeowners to pay off their mortgages before they retire because they know that those payments will become that much more difficult to meet every month now that the cash flow is connected to a finite resource pool.
The 2008 recession left many homeowners underwater on their mortgages when home prices plummeted down, making 2022 the perfect time to both pay off your mortgage while it’s less than the value of your property, as well as liquidate your real estate asset for an easy profit if you’re looking to retire in the near future.