Inflation is hot…and so is real estate. But what does the future hold for both?
As we’ve talked about before, the Federal Reserve is late to the party in dealing with inflation and the latest data shows the rate of inflation is still rising.
Many are feeling the pinch in their wallets, at the gas pump, and at the grocery store.
For would-be real estate buyers that just begs the question…is now a good time to purchase a home?
I’m linking to an article from the real estate blog Keeping Current Matters, and the author does a great job in highlighting why now might be a very good time to buy. You can access the entire article here…
Greg McBride, the Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market:
“Inflation will have a strong influence on where mortgage rates go in the months ahead…Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”
While there’s no denying it’s more expensive to buy and finance a property this year than it was last year, it doesn’t mean potential buyers should pause their search. Here’s why…
History Says So – Real Estate Is A Great Hedge Against Inflation
During periods of inflation, prices generally rise across all areas of the economy.
Historically, however, real estate ownership is a fantastic protection against those increasing costs because buyers can “lock-in” what’s likely the household’s largest monthly fixed cost for the duration of your loan.
Not to mention, as property prices continue to appreciate, the home’s value will, as well.
That’s why Mark Cussen, Financial Writer at Investopedia, says:
“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”
Secondly, nearly all industry experts agree that although the current rate of home appreciation can’t stay this hot, the likelihood of homes losing value is extraordinarily slim. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:
“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
In Conclusion
Purchasing real estate is one of the best financial decisions that can be made during inflationary times. Buyers also receive the advantage of the added security of owning their property in a time when experts are forecasting prices to continue to rise.
If you are considering a purchase, your real estate search shouldn’t go on hold because of rising inflation or higher mortgage rates. Contact me for more…as it would be my pleasure to help you.
