How inflation affects homeowners and buyers in our real estate market.
We keep hearing about inflation in the news lately. It always carries a negative connotation because we don’t want things to cost more. However, when it comes to real estate, is inflation such a bad thing?
If you own your home and have a fixed-rate mortgage, you’re golden. You’re building equity as the value of your home goes up. This price increase isn’t costing you anything, so inflation can be good if you own real estate. However, inflation can be problematic for buyers. Home prices and the cost of building materials will both increase during inflationary periods.
“If you own your home and have a fixed-rate mortgage, you’re golden.”
Lawrence Yun, the chief economist for the National Association of Realtors, recently said that real estate is the best hedge against inflation. Housing prices are rising faster than inflation and have been for the last 50 years. In a previous blog, we discussed how, historically, inflation increases an average of 3.9% annually while home prices increase an average of 4.17%.
If you’re concerned about inflation and rising interest rates, now might be a good time to invest in real estate. If you have any questions about buying, selling, or real estate in general, feel free to call or email us. We’d love to help.
