Here’s what you need to know about how inflation affects real estate.
If you’ve listened to the news recently, you know that we’re experiencing high inflation. Today I’m speaking with Jesse Hardin from Bank of England Mortgage about how inflation impacts our market and what it means for you. He has a lot of great insight, so let’s get into it.
At the most basic level, what is inflation?
Essentially, inflation is a decrease in the purchasing power of your money, and it’s typically the result of prices increasing for goods and services. In other words, the dollar in your pocket is worth less than it was yesterday.
How does inflation affect the real estate market?
Whenever we’re in a period of inflation, real estate assets increase in value. As the cost of goods and services increases, it costs more to build a home, so already existing properties are worth more.
Who does inflation benefit in real estate?
The main winners of inflation are homeowners. If you own a home, it will likely appreciate faster than before.
“Buyers should act sooner rather than later. ”
How would you advise a client worried about inflation?
First, I would schedule a mortgage strategy session to understand what their financial picture is. From there, if purchasing a home makes sense, I would tell them to act sooner rather than later. Home prices are increasing with inflation, so the longer you wait, the more expensive your next property will be. Plus, interest rates remain low, but they’re rising. If you lock in a good rate now, you can still get an affordable mortgage.
What do you say to people who are renting instead of buying?
The first thing I tell every renter is that you’re paying someone else’s mortgage. The interest rate on rent is 100% since you aren’t receiving any benefit from it. At the very least, I would tell renters to consider their loan options. You might be pleasantly surprised at what your buying power is right now.
I would like to thank Jesse for talking to me. If you want to get in contact with him, call him at 859-361-0309 or email jhardin@boemortgage.com. As always, if you have questions about our market or anything else, call or email me. I look forward to hearing from you!
