Should You Still Buy a Home with the Latest News About Inflation?
Despite the Federal Reserve's best efforts to reduce inflation, the most recent data indicate that it is still high, hovering around 8%. The stock market was affected by this information, and discussions about a recession gained momentum.
As you watch the price of goods and services rise, you're probably already feeling the effects on your day-to-day existence. Should I still buy a property now, given the strain it's putting on my pocketbook and the oncoming economic uncertainty? Here is what you need to know if that question is on your mind.
Owning a home has historically been a fantastic inflation hedge.
Prices generally increase in an economy that has inflation. Owning a home has historically been an excellent way to protect yourself from those rising prices because you can fix what is probably your biggest monthly payment (your mortgage) for the life of the loan. This helps some of your monthly expenses remain stable. Bankrate's James Royal, a senior wealth management reporter, explains:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
And given how expensive rent is right now, it might be even more crucial to be able to stabilize your monthly payments and guard against future rent increases. The National Association of Realtors (NAR) Chief Economist, Lawrence Yun, discusses what happened to rents in the most recent inflation report:
“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”
Your lease, which ordinarily renews every year, determines your monthly rent when you rent an apartment. When inflation is strong, your landlord may be more inclined to raise your rent to make up for the effect. That might contribute to the 72% of landlords who stated they intend to raise the rent on one or more of their properties in the upcoming year, according to a realtor.com study.
If you're prepared and able to do so, buying a home can offer enduring stability and a dependable place to live during unpredictable economic times.
A fixed home cost is the ideal inflation hedge. Get in touch with a real estate expert right away if you're prepared to find out more and begin the process of becoming a homeowner.
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