Should I invest in my home during a recession?
1. Are we in a recession?
By one common measure, the economy is certainly in a recession. By another, it is not. Clear enough? Let me explain.
According to Forbes magazine in Oct. 2022… It was announced in July that the nation’s gross domestic product (GDP) contracted for the second consecutive quarter. According to a rule of thumb first introduced by an economist in 1974, and subsequently accepted as conventional wisdom, the economy is, by definition, in a recession.
Yet the National Bureau of Economic Research (NBER), the private organization tasked with officially labeling when the economy is in recession, does not yet believe the economy is in a recession. Why? Well, its definition for recession—significant decline in economic activity that is spread across the economy and lasts more than a few months—leaves more room for interpretation.
While the GDP has struggled, many other economic metrics haven’t. Take the labor market as just one example.
The unemployment rate is just 3.5%, employers added nearly 440,000 jobs a month between May and July and there are currently more than 11 million unfilled jobs.
It just isn’t plausible to claim the economy is in a recession when basically anyone who wants a job can have one.
That being said, all is not well. Inflation is running rampant, which has caused the Federal Reserve to substantially raise interest rates throughout the year. The Fed is so determined to quash high prices that it will almost certainly raise rates even further.
One worry is that the economy would struggle with such high borrowing costs. Businesses may hire less, which could cause more people to be unemployed for longer, thereby reducing their spending and ultimately leading to a true-blue, NBER-certified recession.
Still, that day has not (thankfully) arrived just yet.
2. Is now a good time to remodel my home, build an addition or casita?
Now that you have a better understanding of the state of the economy, you may be wondering, should you be renovating your home right now? And the answer actually may surprise you.
Historically speaking, seasons of recession (or near-recesson) tend to be relatively good times to make home renovations because there can be less competition for contractors and materials, you’ll be stimulating the economy and you can add significant value to your home for if/when you decide to sell.
While investments in stocks, real estate, and others are not a good idea during a recession, investing in your home still is! Everyone knows that money sitting in the bank decreases in value over time, so why not invest that money in your home, which, according to history, will increase in value over time.
A recession is a good time to consider some home updates that make your current home more livable, comfortable and functional.
3. Tucson’s NEW Casita policies are official!
On December 7, 2021, Mayor and Council adopted an amendment to the Unified Development code to allow Accessory Dwelling Units (ADUs), or casitas, in Tucson.
What is a casita?
These smaller units provide an independent living space on the same lot as a primary unit. They are a way of providing more flexible housing options that can help seniors age in place and support multi-generational living, as well as provide an additional income opportunity via a rental for the homeowner.
What do the new rules allow?
The code amendment adopted by Mayor & Council allows:
- One ADU to be built on any residential lot in the city (any lot with one or two homes)
- The maximum size of the ADU is up to 10% of the lot size, up to a maximum of 1,000 square feet. All lots are allowed an ADU of at least 650 square feet.
- The maximum height for ADUs is 12′ or the height of the primary structure on lots with two-story homes
- All other dimensional standards regarding lot coverage and setbacks apply
- One parking space is required per ADU, which can be waived for sites that are a quarter-mile from transit or a bike boulevard; on-street parking can also be used
- Each newly constructed ADU is required to have a cool roof
Inspired Renovations LLC is a full service design and build contractor. We can assist you with your remodel, addition or casita every step of the way. We provide:
- Design services
- Permit ready plans
- Permit submission and approval
- Build from the ground up using framing or S.I.P.S (structurally insulated panels).
- Cabinets – ready to install or custom – both are quality and affordable
- Countertops – we offer granite, quartz or high end quartzite.
- Shower glass and/or glass panels for stairs, entry ways and hallways
NextDoor
