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Should You Buy a Home with Inflation This High?

Wednesday, July 27, 2022   /   by Julie Morgan

Should You Buy a Home with Inflation This High?

Should You Buy a Home with Inflation This High? | MyKCM





Should You Buy a Home with Inflation This High?


While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still going up. You no doubt are feeling the pinch on your wallet at the gas pump or the grocery store, but that news may also leave you wondering: should I still buy a home right now?


Greg McBride, Chief Financial Analyst at Bankrateexplains how inflation is affecting the housing market:



Inflation will have a strong influence on where mortgage rates go in the months ahead. . . . Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”


No one knows how long it’ll take to bring down inflation, and that means the future trajectory of mortgage rates is also unclear. While that uncertainty isn’t comfortable, here’s why both inflation and mortgage rates are important for you and your homeownership plans.


When you buy a home, the mortgage rate and the price of the home matter. Higher mortgage rates impact how much you’ll pay for your monthly mortgage payment – and that directly affects how much you can comfortably afford. And while there’s no denying it’s more expensive to buy and finance a home this year than it was last year, it doesn’t mean you should pause your search. Here’s why.


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. Not to mention, as home prices continue to appreciate, your home’s value will too. That’s why Mark Cussen, Financial Writer at Investopediasays: 



Real estate is one of the time-honored inflation hedges. It's a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”


Also, no one is calling for homes to lose value. As Selma Hepp, Deputy Chief Economist at CoreLogicsays:



“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”


In a nutshell, your home search doesn’t have to go on hold because of rising inflation or higher mortgage rates. There’s more to consider when it comes to why you want to buy a home. In addition to shielding yourself from the impact of inflation and growing your wealth through ongoing price appreciation, there are other reasons to buy a home right now like addressing your changing needs and so much more.


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Ā© 2022 My Florida Regional MLS DBA Stellar MLS, Inc.. All rights reserved. The data relating to real estate displayed on this website comes in part from the Internet Data Exchange (IDX) Program of My Florida Regional MLS DBA Stellar MLS, Inc. All listing information is deemed reliable but not guaranteed and should be independently verified through personal inspection by appropriate professionals. Listings displayed on this website may be subject to prior sale or removal from sale; availability of any listing should always be independently verified. Listing information is provided for consumers' personal, non-commercial use, solely to identify potential properties for potential purchase; all other use is strictly prohibited and may violate relevant federal and state law.8/8/2022 9:22 AM CST
The source of this real property information is the copyrighted and proprietary database compilation of the Southwest Florida MLS organizations Copyright 2022. Southwest Florida MLS organizations. All rights reserved. The accuracy of this information is not warranted or guaranteed. This information should be independently verified if any person intends to engage in a transaction in reliance upon it. The property information herein is derived from various sources that may include, but not be limited to, county records and the Multiple Listing Service and it may include approximations. Although the information is believed to be accurate, it is not warranted and you should not rely upon it without personal verification.
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