Is It Still a Good Idea to Invest in Real Estate?
One of the top questions on American's minds right now is: should I still invest in real estate this year? With inflation at a record high and interest rates rising, many Americans are concerned that now is not the time to buy. How can you decide if buying a home is still a good idea this year? Start with some data.
Real Estate Remains a Top Investment
According to an annual poll by Gallop, Americans rate real estate as the best investment for the 9th year in a row. While interest rates may be rising and the power of the dollar may have weakened, real estate remains a favorite investment for the same reasons it always has.
Buying a home is still a reliable long term investment if you plant to own the property for a long time. Even if the market takes a minor dip in the next year or so, you can reliably expect the value of your home to increase dramatically over the next decade.
Real estate is one of the only lucrative investments that allows you to enjoy your investment both now and later. As housing costs rise, rent rises along with it, so settling into a locked in mortgage payment that doubles as an investment just makes sense.
Owning Real Estate is a Safeguard Against Inflation
Inflation has reached its highest point in 40 years. Americans are working to figure out how to weather a struggling economy, and owning real estate is one of the best ways to do just that. Inflation means rising costs across all industries, which translates into higher costs for you each month. There is one exception: your locked in mortgage payment. For most people, a monthly housing payment is the highest bill they pay. Locking in a price now is one of the most influential ways to safeguard yourself against rising inflation.
Even if buying a house requires some financial stretching and sacrifice right now, you will reap the benefits almost immediately in an economy like this. As rent prices rise, your home will continue to cost the same. You may even be able to lower your monthly payment in the future with refinancing as the economy bounces back.
Inflation can also work in your favor as a homeowner. Historically, as inflation increases, home prices follow. The earlier you can buy a home, the more you will benefit from these rising prices as they become equity in your pocket. The vast majority of Americans agree that owning a home is the best way to make inflation work in your favor, increasing your home equity and therefore your net worth.
With stressful headlines about interest rates popping up around every corner, it can be easy to feel frantic or assume that the time to buy has passed. However, even with interest rates nearly double what they were a year ago, they are still historically quite low. Many buyers are still getting interest rates near 5%, which still makes owning a home doable for a large group of people.
For example, a $400,000 home purchased with a 3.5% down payment at a 5% interest rate will cost about $2,500 per month. In many cases this is a similar payment to rent for a comparable property, but with the benefits that come from homeownership. When you crunch the numbers with a loan officer you may be happy to discover that buying a home, while slightly more expensive than this time last year, is still possible.
To find out if you qualify to buy a home, and how much you can afford today, schedule an appointment with one of our agents to get started! Even as interest rates begin to rise, it's still a great time to buy.
Post a Comment