In addition to being a great way to hedge against inflation, purchasing real estate is one of the best investments you can make. With the annual inflation rate at 7.5% at the time of writing, the highest in 40 years, you might be wondering if now is the best time to buy a new home.
(Source: www.usinflationcalculator.com)
Real estate is a long-term investment, so if you’re looking for a short-term gain, buying right now is probably not the best idea in your case. For the long term, though, real estate has been, and continues to be, a great investment over time. Historically, real estate values have outpaced inflation, making it a great way to protect your money. And while you may not become a millionaire with your investment, real estate can certainly help you improve your financial position.
What are some other concerns that might be holding you back from purchasing a home right now?
Are you waiting for prices to come down? All economic projections are indicating that home prices are going to continue to rise, as are interest rates. The longer you wait, the less purchasing power you will have. Dr. Lawrence Yun, chief economist for the National Association of REALTORS®, and a panel of economists at NAR, forecast that median home prices will increase by 5.7% in 2022, while other experts expect to see a rise of 6.6%. Again, if you’re looking for a long-term investment, you’re not too late to capitalize on this trend…especially before interest rates rise further.
Do you want more listings to hit the market, giving you a better chance of finding what you want? We would LOVE to have more listings, but inventory will continue to remain low, at least for the first half of the year. Rather than waiting, you may want to entertain the idea of building. After all, the gap between existing home prices and new construction has closed dramatically, making building a much more attractive value proposition.
Afraid a multiple offer scenario will drive you out of your mind?
In this market, competition is still fierce on hot properties. At this stage of the game, though, many REALTORS® are used to handling multiple offers, so you wouldn’t be going through them alone. They do, however, recommend that buyers take some steps prior to starting their search. Here are 3 of the most important steps:
- Get a preapproval letter: By being proactive and going to your lender first to see what your budget will allow, that letter will carry a lot of weight, making your offer stand out against others.
- Pay in cash if you can: A cash offer means no mortgage approval is needed and the transaction process can happen at a quicker pace.
- Lose the contingencies: In this market, time is of the essence, and sellers aren’t necessarily able to wait until a prospective buyer sells their home. Lending institutions have risen up to meet the need for bridge, or swing loans. An offer without contingencies will win out every time.
But, if you’re not willing to compete, it might not be the best time for you to buy. However, if you BUILD a home, the competitive offer situation becomes a non-issue. Buyers will still have to wait a little while for competitive home shopping to cool down, but we should see some relief, maybe later this year.
We can all agree that the past year has been among the most challenging in history for home shoppers. The shortage of listings contributed to bidding wars and drove prices higher, and builders struggled to keep up with demand as home shoppers turned to new construction.
For all of the latest information on our local real estate market in Southwestern Indiana, you can always trust the professionals at F.C. Tucker Emge. Our agents have superior training and resources at their disposal so they can better educate you about the road to homeownership. Even if you are 6-12 months (or more!) out from making a change, there is a lot to learn about the home buying process, and our agents can help you learn what you need to know so that you can be confident in your decision and have a smooth experience when the time comes. Let’s Talk!
