Have you noticed inflation in your day to day yet? Milk costs a little more, the dollar store is now the ‘dollar twenty-five cents store’, and even the neighbor kid raised his price to mow my lawn. What’s going on?
Well, the rate of inflation, as measured by the Consumer Price Index (CPI), increased 0.8% in February after rising 0.6% in January. Overall, the CPI is up 7.9% since this time last year – a 40-year high and the largest 12-month increase since February 1982.
So – is buying a home a really good idea right now? The answer is “yes” – in fact, real estate has historically been a reliable hedge against inflation. On average, housing prices across a longer time span, such as 100 years, have kept up with the rate of inflation. It can even be a potential earning opportunity when prices are rising. That’s because if the price of real estate goes up too, there’s potential for greater resale value down the line. In fact, home appreciation right now is up 20% year over year – even in the midst of record high CPI increases.
Buying now, despite prices being driven up by supply, interest rates, and inflation, can save you money in the long run. Consider how inflation impacts renters; when inflation drives consumer prices higher but demand for rental housing remains steady, landlords leverage that to increase rental prices. Every 12 to 18 months renters run the risk that their rent will rise.
Now consider how inflation impacts a mortgage payment – with an interest rate that doesn’t change, the amount you pay for your home monthly won’t increase although the value of your home might.
My advice continues to be to invest in real estate. It’s proven to be a hedge against inflation, and a great way to build wealth over time, regardless of what the economy is doing.
It is a tough market right now, but that doesn’t mean you still can’t make the right move for yourself. Give me a call today and let’s talk about what options you have.
Warmly,
Arynne Crane
PS – Want to get started with the home buying process ASAP? Click here to schedule a FREE real estate possibility call with me!
