First let's look at the pros:

Pros of buying new:

You can buy for less. When the economy is down, the housing market tends to follow some. For one, people are hunkering down and trying to ride out the economic storm, and lenders are far more wary of giving out loans since jobs are not as secure, and incomes become tight. This usually results in an excess of homes on the market. A lot of times a builder will discount new house simply as a way of moving inventory faster as they have carrying costs for empty homes. In other cases you can find someone who started building a new home, and when times got hard they determined they really could not afford it. Sometimes you can get a home for cost, or not too far above it. So, while it is a bit risky to buy new during a recession or economic downward cycle, if you have security in income, etc. it can be a great way to get a new home for less. Of course, you run the risk of losing value right after you buy if the market continues to go down. However, historically the housing market is extremely slow to decline, and generally does not decline like other sectors of the economy. So, it is a fairly safe option.

Helpful Resources: Adding Value to Your Home This is a great article about buying and fixing up homes. While not directly related to whether or not you should buy new or fix up your existing home, it is a great site for learning ways to add value to your home. Fixing Up Your Home This is a great link for learning how to fix up your house so that it will sell for more and you can buy another house. It offers valuable ways to help you choose the best things to fix in your home. Real Estate This is a great link for learning tips and tricks for making your fixer upper into a great home to live in. It offers great advice and links for learning about real estate and how to fix up your home. Economic Cycles This is a great link for understanding more about how the economic cycles affects the housing market, and whether or not you should buy or fix up your existing house if the economy is poor. Getting the Best Deal for Your Money This is a great site for learning about buying new homes, new construction homes, etc. it offers tips and advice for buying a new home during the economic crunch, and getting the best deal for your money. Buying New Homes This is an informative link for anyone who wants to buy a new house on their own. It offers great tips for buying new homes, and things you can do to get a good new home that is worth the price. First Time Home Buyers This is a great site for first time home buyers, or people who have not bought a new home in a long time. If you decide to buy rather than fix up your existing home this is a useful site. Mortgage Calculator This site offers a mortgage calculator, and can be useful for anyone who is wanting to determine financially if it would be better to buy new or fix up an existing home. It offers tips for home buying. Benefits of Equity Loans This is a link for getting a home equity loan for fixing your home up and making it nicer. It has a quick and easy online application process, and a look at current rates and benefits of equity loans. Home Equity Loans This is a home equity loan site that offers tips for people looking to get a home equity loan for fixing up or improving their existing home. It offers some great advice on home equity loans and lines of credit.

You can usually get good rates. When times get hard, the government will often lower the interest rates in order to help boost economy and get people to spend. This means that you can lock in a loan with an incredible interest rate. This can be a really great time to buy if you have the credit and money to get a loan. Home loan interest rates are at an all-time low, and while qualifying for a loan is difficult, lenders will work for your business if you are qualified because their business is going down and they do not want to invest the time into you and lose you to someone else giving you a better offer.

When the economy is on a downturn, usually the housing market slows, which generally means you have more selection, and sellers may be willing to compete for your business. A buyer's market, as it is called, is most often going to occur when the economy goes bad. For one, job loss may force people to leave an area, leaving large numbers of homes vacant. This means that sellers become more desperate, and you, the buyer, can often negotiate better terms for buying a home with more things thrown in, and lower prices. So, in some cases, it is going to be less money for you to buy a new home then it is going to be to fix your own. However, this is only if you can sell yours.

The cons:

You are entering into a new thirty year loan. In most cases, if you already own a home, you will have some equity in it because you have paid down your loan some. If you buy a new house, you may enter it with little equity, and a longer term of repayment, which means you will have a mortgage longer. For someone who has only owned a home a couple of years, this won't make much difference, but if you have lived in your current house 15 years, trading in a home that will be paid off in at most 15 more years for one that might take twice that long to pay off can be hard.

Usually if you decide to buy new instead of fixing up an existing home, you have to sell your existing home first, which can be extremely difficult during tough economic times. However, if you are trying to determine whether to buy an older home and fix it up, or a brand new home, sometimes it is a much better option to buy old and fix up as sellers have more equity, and thus can sell for less. It really depends on the house though.

If you buy new and the market continues to decline, you could get upside down in your home. It is easier to get a good deal on an existing older home, than on a new home.

Pros for fixing up you existing home:

Home equity loan rates are super low. While buying new can be good because home mortgage loan rates are low, home equity loan rates are even lower. This means that if you have to take a loan out to fix your home up, you can usually pull equity out of your home and use that to fix it up. This can be done for exceedingly low rates, such as 4.5% or less. This can make home equity loans very tempting, and a cheaper option than a new loan altogether. When times are tight, and every penny counts, the lower interest rate is going to make it possible.

You do not lose anything in Realtor fees. Buying a home has expenses. You have fees for loan origination, title fees, and all sorts of other miscellaneous fees for the loan, as well as your Realtor fees. If you fix up an existing home instead of buying a new one, you could do so for much less money. The fact is, just getting a new home loan can cost you several thousand dollars, and that is if you do not pay anything for the Realtor (such as the fees to sell your existing home), the money can go a long way toward fixing up the home you have. Imagine what a couple of thousand of dollars could do for a bathroom? You could refinish your tub, put in new tile, a new toilet, and a new vanity. So, in some cases it is far cheaper to fix up a home then buy a new one, and the results can be very similar.

You do not have to try and qualify for a loan. When economic times are hard the loan industry tightens its belt and is far more wary of lending. This is because people's income, and priorities change. If they are forced to choose between feeding their family and paying their mortgage, they will consistently choose to feed their family. So, it is much easier to get a loan like a home equity loan, then it is to get a whole new mortgage. This can mean less headache for you.

You do not have to move. If you choose to fix your home up to get a fresh look, rather than buy new, you get the advantage of not having to pay for movers, a moving truck, boxes, tape, etc. Instead you can stay where you are.

Probably the biggest pro of fixing up a home rather than buying new is that you can take expenses one at a time, as you can afford them. This means that, if for example, you lose a job you won't be stuck with a new, high mortgage, but can put off certain repairs until you again have income. While this is not as instantly satisfying as buying a new home, it can be far less burdensome, which means less stress in your life.

The cons:

Fixed up is never going to be as perfect as brand new, however, in many cases you can create a great house by remodeling or fixing up an existing one, and while it won't be as new as a new home, it can still have exactly what you want.

It takes time. A lot of times, buying a new home can mean that you get into a newer, nicer place within a few months. If you redo or fix up an existing home, it can take several months to a year to finish all of your projects, especially if you do not have enough funds to do them all at once.

Whether or not you should fix up your home or buy new is really a personal decision that should be based on factors such as what your personality, budget, and time frame can handle. It is not a choice that can be made by inking out general pros and cons on paper. So, if times are tight, and the economy is on a downward cycle, evaluate your situation. Evaluate the security of your job, and evaluate your housing situation to determine which is going to best fit you.