Should You Buy a Home if You're Worried About a Recession?

The short answer? It depends how worried you are, and what financial backup plan you have.

Will there be a recession in 2023? That's a question on a lot of people's minds, and the experts seem mixed.

There was a point earlier on in the year when economists seemed sure that a recession would strike in the new year. Recently, some have scaled back their warnings, though, calling a recession a possibility more so than an inevitability.

That's putting a lot of people in a tough position, though. After all, it's hard to make financial plans when we don't know what's in store for the economy in the near term.

If you're looking to buy a home, you might be especially worried about doing so on the cusp of a recession. And that's understandable. But should recession fears keep you from taking that leap? Well, it depends.

What does your financial situation look like?

The big concern about a recession hitting is that it can lead to an uptick in unemployment. And the last thing you want to do is buy a home and take on a mortgage, only to end up losing your job and falling behind on those payments.

If that's a real concern for you, and you don't have much of a recession backup plan to look to, then you may want to put your homeownership plans on hold. But if you're in a solid position to cope with a recession-fueled layoff, then it's a different story.

Let's say you're buying a home solo, so you don't have another person's income to fall back on in case you lose your job. But, let's also say you're buying a $300,000 home when you can afford a home that costs twice that much.

Let's also imagine that even after emptying out your savings account for your down payment, you still have enough money on hand to cover 12 months' worth of bills, including your new mortgage payment. In that case, you don't necessarily have to put off homeownership, because if you were to lose your job, you'd have a means of paying your mortgage for a long time while you look for a new one.

Your peace of mind should play a role, too

Maybe you're in a position where getting laid off in a recession wouldn't necessarily cause you to miss mortgage payments. But if the idea of buying a home right now seems too risky, to the point where it makes you anxious, then that alone is reason enough to hit pause on those plans.

The whole point of buying a home is to improve your life. If you're losing sleep over the idea of buying one when a recession could strike, then you won't be doing yourself any favors.

All told, we really don't know what's in store for the economy in 2023. But if you'd rather sit tight and wait things out, there's nothing wrong with that. And if you're in a good place financially, there's also nothing wrong with signing a mortgage today -- even if there's a chance you'll end up out of work in the new year.