Here’s the impact that inflation may have on homebuyers this year.
Inflation has been in the news quite a bit lately, so many of you are wondering if that means you should hold off from purchasing a home. If that describes your situation, there are a few things to consider.
The first is affordability. If you’re struggling to pay your rent, current mortgage, or may struggle with the extra costs of a home purchase, you may want to wait and see what’s going to be best for your financial situation. You want a nest egg to fall back on, just in case. That being said, over the last 30 years, home values have outpaced inflation. Purchasing property is a great way to protect your money; history shows that you won’t lose out by purchasing a home.
"Over the last 30 years, home values have outpaced inflation."
In 2021, inflation increased by about 7.5% in the U.S., but housing markets rose by around 20%, depending on the area. Some of the major housing authorities such as Fannie Mae, the National Association of Realtors (NAR), and Zillow are predicting an 11% growth in home price appreciation this year, and some are predicting much higher rates. Even if inflation continues at 7% or escalates to 10%, housing appreciation will beat it.
Despite the upward trajectory of prices, it’s still an excellent time to buy. Interest rates are destined to climb a little, but even if they do, you’ll still win out due to inflation. Rents will also tick up with inflation, along with multiple other things, but according to the data, historically, housing has been a good hedge against inflation.
If you have questions or would like to discuss your particular situation, I’m always available to provide advice or help in any way I can. Just call or email me; I would love to help you.