While Federal Reserve is working hard to reduce inflation, the most recent figures show that the inflation rate is still rising. You are no doubt feeling the squeeze on your wallet at the gas pump or at the supermarket, but this news may also leave you wondering: should I still buy a house now?
Greg McBride, chief financial analyst at Bankrate, explains how inflation is affecting the real estate market:
"Inflation will have a strong influence on the evolution of mortgage rates in the coming months. . . . Whenever inflation finally starts to ease, so do mortgage rates - but even then, home prices are still subject to demand and very tight supply."
Nobody knows how long it will take to bring down the inflationand this means that future trajectory of mortgage rates is also unclear. While this uncertainty is not comfortable, here's why both inflation and mortgage rates are important for you and your estate plans.
When you buy a house, the mortgage rate and the price of the house are important. Higher mortgage rates affect how much you will pay for the monthly mortgage payment - and this directly affects how much you can comfortably afford. And while there's no denying that it is more expensive to buy and finance a home this year than last year, that doesn't mean you should pause your search. Here's why.
Home ownership is historically a great hedge against inflation
In an inflationary economy, prices rise across the board. Historically, home ownership is a great protection against these rising costsbecause you can lock in what is probably your largest monthly payment (your mortgage) for the duration of your loan. This helps stabilize some of your monthly expenses. Not to mention that, as you house prices continue to appreciate in value, so does the value of your home. This is why Mark Cussen, financial writer for Investopedia, says:
"Real estate is one of the time-honored inflation hedges. It is a tangible asset, and these tend to maintain their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values."
Moreover, the market is not pulling a movement for houses to lose value. As Selma Hepp, deputy chief economist at CoreLogic, says:
"The current rate of growth in home prices is unsustainable, and higher mortgage rates, along with more inventory, will lead to slower growth in house prices, but unlikely declines in house prices".
In a nutshell, your home search doesn't have to be in a waiting mode because of rising inflation or higher mortgage rates. There is more to consider when it comes to why you want to buy a house. In addition to protecting itself from the impact of inflation and increasing their wealth Through continued price appreciation, there are other reasons to buy a house now, such as meeting your changing needs and more.
See an article with more arguments: What does an economic slowdown mean for the real estate market?
Are you in doubt?
Now that you know how the experts are seeing inflation and home prices behave in the inflationary upswing in the United States you can already consider investing in vacation homes in orlando. To take advantage of all the tips we have brought to you and deepen them even more, you can talk directly to our relationship agents. They are always willing to talk to you with any questions you may have about investing in Florida.
In this text we approached the theme the behavior of the real estate market during recessions because it is interesting for those looking to invest in Florida. If you want to read more content like the one we brought in this article, just stay tuned here on our blog.
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