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Home > Should You Buy a Home with Inflation This High?

Should You Buy a Home with Inflation This High?

July 20, 2022 by jleonardi

Should You Buy a Home with Inflation This High? | Simplifying The Market

While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still going up. You no doubt are feeling the pinch on your wallet at the gas pump or the grocery store, but that news may also leave you wondering: should I still buy a home right now?

Greg McBride, 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.”

No one knows how long it’ll take to bring down inflation, and that means the future trajectory of mortgage rates is also unclear. While that uncertainty isn’t comfortable, here’s why both inflation and mortgage rates are important for you and your homeownership plans.

When you buy a home, the mortgage rate and the price of the home matter. Higher mortgage rates impact how much you’ll pay for your monthly mortgage payment – and that directly affects how much you can comfortably afford. And while there’s no denying it’s more expensive to buy and finance a home this year than it was last year, it doesn’t mean you should pause your search. Here’s why.

Homeownership Is Historically a Great Hedge Against Inflation

In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. Not to mention, as home prices continue to appreciate, your home’s value will too. 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.”

Also, no one is calling for homes to lose value. 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 a nutshell, your home search doesn’t have to go on hold because of rising inflation or higher mortgage rates. There’s more to consider when it comes to why you want to buy a home. In addition to shielding yourself from the impact of inflation and growing your wealth through ongoing price appreciation, there are other reasons to buy a home right now like addressing your changing needs and so much more.

Bottom Line

Homeownership is one of the best decisions you can make in an inflationary economy. You get the benefit of the added security of owning your home in a time when experts are forecasting prices to continue to rise.

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If you’re looking to buy a home this fall, there If you’re looking to buy a home this fall, there are a few things you need to know. Affordability is tight with today’s mortgage rates and rising home prices. At the same time, there’s a limited number of homes on the market right now and that’s creating some competition among buyers. But, if you’re strategic, there are ways to navigate these waters. The first thing you’ll want to do is get pre-approved for a mortgage. That way you’ll know your numbers and can set yourself up for success from the start of your home search. 

What Pre-Approval Does for You

Basically, pre-approval gives you critical information about the homebuying process that’ll help you understand how much you may be able to borrow. Why does this help you, especially today? With higher mortgage rates and home prices impacting affordability for many buyers right now, a solid understanding of your numbers is even more important so you can truly wrap your head around your options. 

Pre-Approval Helps Show Sellers You’re a Serious Buyer

Let’s face it, there are more buyers looking to buy than there are homes available for sale and that imbalance is creating some competition among homebuyers.

Pre-approval shows the seller you’re a serious buyer that’s already undergone a credit and financial check, making it more likely that the sale will move forward without unexpected delays or financial issues.

Getting pre-approved is an important first step when you’re buying a home. The more prepared you are, the better chance you have of getting the home you want. Connect with a trusted lender so you have the tools you need to purchase a home in today’s market.

#firsttimehomebuyer #opportunity

Reach out if we can help you with real estate - John Leonardi, Broker/Owner LeonardiRealEstate.com
While remote work peaked during the pandemic, many While remote work peaked during the pandemic, many people still work from home today. If you’re one of them, it could have an unexpected benefit when you’re looking to buy a home. If you can work from home, you might have more choices for where to live. DM me to talk about your options and what's most important to you.

#firsttimehomebuyer #opportunity

Reach out if we can help you with real estate - John Leonardi, Broker/Owner LeonardiRealEstate.com
Buying and owning your own home can have a big imp Buying and owning your own home can have a big impact on your life. While there are financial reasons to become a homeowner, it's essential to think about the non-financial benefits that make a home more than just a place to live. 

Here are some of the top non-financial reasons to buy a home.

According to Fannie Mae, 94% of survey respondents say “Having Control Over What You Do with Your Living Space” is a top reason to own.

Your home is truly your own space. If you own a home, unless there are specific homeowner association requirements, you can decorate and change it the way you like. 

Fannie Mae also finds 90% say “Having a Good Place for Your Family To Raise Your Children” tops their list of why it’s better to buy a home. 

Another important factor to think about is what stage of life you’re in. U.S. News breaks it down: “For those with young children, buying a home and putting down roots is a major driver. . . . You don’t want the upheaval of a massive rent increase or a non-renewed lease to impact your sense of stability.”

Lastly, Fannie Mae says 82% list “Feeling Engaged in Your Community” as another key motivator to own. 

People who own homes usually live in them for an average of nine years, according to the National Association of Realtors (NAR). As that time passes, it’s natural to make friends and build strong ties in the community. 

When you care deeply about the people you live near, you’ll do what you can to contribute to your local area.

Owning your home can make your life better by giving you a sense of accomplishment, pride, stability, and connectedness. If you're thinking about becoming a homeowner and want to learn more, DM me.

#firsttimehomebuyer #opportunity

Reach out if we can help you with real estate - John Leonardi, Broker/Owner LeonardiRealEstate.com
The way Americans work has changed in recent years The way Americans work has changed in recent years, and remote work is at the forefront of this shift. Experts say it’ll continue to be popular for years to come and project that 36.2 million Americans will be working remotely by 2025. To give you some perspective, that's a 417% increase compared to the pre-pandemic years when there were just 7 million remote workers.

If you’re in the market to buy a home and you work remotely either full or part-time, this trend is a game-changer. It can help you overcome some of today’s affordability and housing inventory challenges.

How Remote Work Helps with Affordability 

Remote or hybrid work allows you to change how you approach your home search.

If you're thinking about moving, having this kind of location flexibility can boost your chances of finding a home that fits your budget. Work with your agent to cast a wider net that includes additional areas with a lower cost of living.

More Work Flexibility Means More Home Options

And as you broaden your search to include more affordable options, you may also find you have the chance to get more features for your money too. Given the low supply of homes for sale, finding a home that fits all your wants and needs can be challenging. 

By opening up your search, you’ll give yourself a bigger pool of options to choose from, and that makes it easier to find a home that truly fits your lifestyle.

Remote work goes beyond job flexibility. It's a chance to broaden your horizons in your home search. Without being bound to a fixed location, you have the freedom to explore all of your options. DM me to find out how this freedom can lead you to your ideal home.

#firsttimehomebuyer #opportunity

Reach out if we can help you with real estate - John Leonardi, Broker/Owner LeonardiRealEstate.com
SOLD! Congratulations to our Sellers 🎉🏠 . . SOLD! Congratulations to our Sellers 🎉🏠
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