When there is inflation in the economy our dollar loses value therefore impacts our ability to spend. So how does this impact the housing market?
Since the beginning of the COVID 19 pandemic we have seen a huge increase in demand for housing and a shortage of inventory. For homeowners, fortunately inflation is a benefit. The most obvious being that the value of your home rises and especially with a low supply the demand is even higher making it a great time to sell. However, that also means it’s a much more difficult time to buy.
As an investor, if you own property as a leveraged asset and are taking advantage of the current low financing rates you’ll notice yourself paying a fixed rate each month even as your properties value climbs, making your return on investment (ROI) quite desirable. Similar to the standard residential home buyer, investing in a new property will prove to be more challenging. Although, if you are looking to make a long term investment you should see similar results in the future as current investors are seeing today.
According to The Washington Post there isn’t much data suggesting a market decline is looming. Many of those who experienced the 2008 housing bubble understandably have fears of history repeating itself but luckily the current asset market is extremely different from ‘08. Right now the economy is growing, unemployment is low, and people are optimistic about the world reopening to a more pre-pandemic life.
Doug Duncan, senior vice president and chief economist at Fannie Mae said in an NBC News Article that, “There’s no expectation that prices will fall, but our forecast suggests that price appreciation will slow.” Duncan is predicting that prices shouldn’t repeat the 18% increase we saw last year but they could still rise around 7.5%.
All that being said, it's important to utilize your resources and seek advice from the experts. The Legacy Real Estate Group is here to help. We have over 20 years of experience and many industry connections to make sure you are making the best decision for your financial future. Fill out the form below to start the conversation.