So you know the news today is all about inflation, it's something we feel in our everyday lives as prices go up for gas, groceries, and everything else. As the cost of living continues to rise, big purchases might not be worth it unless they're really important.
Hey, it's Andy with The Mandel Team at RE/MAX, and if you've been thinking about purchasing a home this year, you're probably wondering, should you continue down that path or does it make sense to wait? While the answer really depends on your situation, here's how home ownership can help you combat the rising costs that come with inflation. Investopedia explains that during periods of high inflation, prices rise across the board, things like food, entertainment, and other goods and services, but also, for housing. With both rental prices and home prices on the rise, how can you protect yourself from rising costs?
Buying a home allows you to stabilize what's typically your biggest monthly expense, your housing cost. If you get a fixed rate mortgage on your home, you lock in your monthly payment for the duration of your loan for 15 to 30 years, and while your taxes and insurance costs will still fluctuate slightly, the biggest part of your payment, the principle and interest, stays the same. While the insurance costs are a little crazy in Florida right now, if it's your homestead primary residence, your taxes can't go up more than 3% in any one year, and they usually end up going less than that. So if you rent, your landlord gets to determine how much you pay every month and that can change by however much he or she wants in any given year. Rising mortgage rates and home prices mean, buying a house today costs more than it did a year ago, but you still have an opportunity to set yourself up for the long-term win by buying now.
Buying now lets you lock in today's rates and prices before they both climb higher. In inflationary times, it's especially important to invest your money in an asset that traditionally holds its value or grows in value. Historically, home price appreciation outperformed inflation in most decades going all the way back to the '70s, making home ownership a historically strong hedge against inflation. In South Florida, we have the Everglades to the west and the ocean to the east, and we don't have much more land available to keep building. Because of this and many other factors continuing to move people to South Florida, experts say home prices will only continue to go up from here, and since home prices typically grow in value, even when there's inflation, you have peace of mind that history and facts show your investment is a strong one. If you're ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation, and how to time your purchase, let's connect.Posted by Andy Mandel on