Why might buying a home during a recession be a good decision for some consumers?

• A. Government policies during recessions typically discourage home ownership.
• B. Recessions guarantee that home values will immediately increase after purchase.
• C. Home prices may be lower due to decreased demand, allowing consumers to purchase property at a reduced cost.
• D. Interest rates on mortgages are always higher during recessions, making home purchases more expensive.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the economic environment during a recession, which is characterized by reduced consumer spending and lower demand for goods and services, including housing.
2. Step 2: Recognize that decreased demand for homes during a recession often leads to lower home prices, as sellers compete to attract fewer buyers.
3. Step 3: Analyze how lower home prices can benefit consumers by reducing the initial cost of purchasing a home, making it more affordable compared to periods of economic growth.
4. Step 4: Consider the role of interest rates during recessions, which can sometimes be lower due to monetary policy aimed at stimulating the economy, potentially reducing the cost of mortgage borrowing.
5. Step 5: Conclude that buying a home during a recession might be advantageous for some consumers because they can purchase property at a reduced price and possibly benefit from lower interest rates, despite the overall economic uncertainty.