The economy is ever-changing, and with it, so is the real estate market. Right now, we’re in the midst of a time of rising inflation. This phenomenon can cause anxiety for those looking to purchase a home, as they wonder if now is the right time to buy or if they should wait for prices to level off.
Given the present condition of the economy, this implies that people are taking a more cautious approach than they had in previous years. According to the National Association of Realtors (NAR), existing home sales declined by 20.2% to 4.8 million houses in July from six million a year earlier. Nonetheless, the median price was $403,800, or a 10.8% increase from the same time last year, which is a good indicator that houses are still selling at a fast pace.
If you’re considering buying a property but are on the fence about whether or not to do so while inflation is climbing, here are a few things you should keep in mind.
What happens to the housing market when inflation is rising?
Inflation refers to the rate at which prices for goods and services increase. When inflation is on the rise, it means that your money doesn’t go as far as it used to. This can make purchasing a home more difficult, as prices will likely be higher than they were before inflation began to climb.
However, it’s important to remember that inflation doesn’t necessarily mean the housing market is crashing. In fact, during periods of rising inflation, the housing market has historically performed quite well. This is because as prices for goods and services increase, incomes typically rise as well. This means that more people can afford a home, which drives up demand and ultimately causes prices to increase.
Of course, there is always the potential for a market crash, regardless of whether or not inflation is rising. However, if you’re considering purchasing a home, it’s important to remember that inflation isn’t necessarily a predictor of a crash. In fact, in many cases, the housing market has performed quite well during rising inflation.
When is the best time to buy a home during high inflation?
There is no easy answer regarding the best time to buy a home if inflation is rising. Ultimately, it depends on various factors, including your personal finances and your goals for the property.
If you’re looking to purchase a home as an investment, you may want to consider doing so while inflation is still low. This way, you can purchase the property for a relatively low price and then sell it when inflation has caused prices to increase. Of course, there’s always the risk that the market could crash before you can sell, so this isn’t a decision to be made lightly.
If you’re looking to purchase a home to live in, you may want to wait until inflation has begun to level off. This way, you can avoid paying more for the property than necessary. Of course, this strategy only works if you’re not in a rush to purchase a house. If you need to purchase a property quickly, you may have to do so while inflation is still rising.
What are the benefits of buying a property while inflation is on the rise?
In short, no one really knows what’s going to happen with inflation. It’s difficult to predict whether prices will continue to rise at the same rate, level off, or even decrease. However, if you have the financial means to purchase a property now, there are some benefits to doing so.
For one thing, demand for housing is currently outpacing supply. This means that if you do buy a property while prices are still climbing, your investment will likely go up in value. Additionally, interest rates are still relatively low, meaning your monthly mortgage payments will be more manageable than they would be if rates were higher. Finally, if you’re looking to purchase a home as an investment, buying while inflation is still climbing can help you make a profit down the road.
What are the risks?
Of course, there are also risks involved in buying a property during a time of inflation. For one thing, your mortgage payments could become unmanageable if inflation continues to rise and interest rates follow suit. Suppose you’re purchasing an investment property. In that case, there’s always the possibility that renters will default on their lease payments if their own income doesn’t keep pace with rising prices. And if you’re looking to buy a house to live in, it’s important to remember that your property taxes will go up along with inflation.
Should you purchase a property now?
Ultimately, whether or not you decide to purchase a property while inflation is climbing should come down to your personal circumstances. If you have the financial means to do so and feel confident in your ability to make your mortgage payments even if interest rates rise, then it may be worth considering taking the plunge. However, if you’re not in a position where you feel comfortable taking on that level of risk, then it may be wiser to wait until prices have leveled off or begun decreasing before making your purchase.
The bottom line
There is no easy answer when it comes to deciding whether or not to purchase a property while inflation is rising. It’s important to weigh the potential risks and benefits carefully before making any decisions. At the end of the day, the best decision is the one that makes the most sense for your personal circumstances and financial situation.