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Navigating Rising Inflation When Buying a Home

Inflation is changing the face of the housing market. As financial pressure increases, the impact is far reaching, affecting everything from prices and home values to home sales, construction costs, and more. Here are some tips for buying a home during inflationary periods:

Research market trends – Although sales prices are declining in some areas, other areas remain steady. Nationally, Corelogic reports that home prices rose 5.5 percent year-over-year in January 2023. Some homeowners are choosing to hold off on selling which decreases inventory and spurs competition putting upward pressure on pricing.

Assess your housing budget – Be realistic on the mortgage you can afford. Inflation increases costs for other items such as gas, food, clothing, etc. Allow a buffer to account for cost fluctuations. Increase your credit score and down payment –Inflation results in higher interest on savings accounts. Take advantage by putting your down payment savings into a high-yield account. The higher the down payment and credit score, the lower the rate offers you’ll receive. Consider other financing options – Consider an Adjustable-Rate Mortgage (ARM) that allows you to refinance when interest rates stabilize or go down. Some lenders will even fund a temporary interest rate buy down at no cost.

Buy sooner rather than later - Remember that all costs are going up, including rent.

By purchasing now, you can lock in a fixed housing cost versus contending with annual rent increases and additional interest rate hikes.

Many believe that mortgage rates will pull back later this year. However, no one can predict when exactly inflation might ease. If you are ready to buy a home, don’t let rising inflation keep you from making your move!