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The Latest on Inflation: Should You Still Buy a Home?

Your Digital Home Advisors

by zac folsom

While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.

You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still buy a home right now?” If that question is top of mind for you, here’s what you need to know.

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. James Royal, Senior Wealth Management Reporter at Bankrateexplains:



And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:

When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.

Becoming a homeowner, if you’re ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.

Tips For Buying a Home In the Current Market

If you’re interested in a new home in today’s seller’s housing market, there’s still a considerable amount of planning to be undertaken to make sure you make a sound decision. Here are two tips to help you venture out in the right direction in your search for a home with the right choices.

1. Research and Know Your Options.

Start by studying your local marketplace so you can adjust your budget for your home search. Online real estate search websites let you see the marketplace in the area where you’re planning to buy. Then, find a lender and obtain pre-approval for a mortgage before you begin your house hunt. Pre-approval will consider your financial picture and give you a mortgage limit that you can use to keep tabs on your price range. In a competitive market, having a pre-approved loan may be useful.

2. Explore emerging neighborhoods.



Neighborhood equity is how desirable a certain neighborhood is for buyers. Issues such as cleanliness, walkability, curb appeal, schools, access to public transit, and overall safety influence buying decisions.

Where to Go From Here

The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, let’s connect.