The 3 biggest reasons to buy real estate now are:
- Increasing Rents: Rents are skyrocketing and will only continue to shoot up with inflation. Buying now allows homeowners to permanently fix their housing payments.
- Locking In a Low Rate: Rates remain extremely low but will inevitably climb as inflation signals get stronger and stronger. Buying now allows homeowners to lock in a low rate before rates shoot up with inflation.
- Inflation Hedge: Inflation is already here and will most certainly get worse at some point. This is not only because higher prices have now worked their way into the entire supply-chain, but also because our government desperately needs inflation to pay off our massive federal debt load. Because housing is a hard asset, its value tends to increase with inflation (while dollars sitting in the bank become worth less and less with inflation).
And, once again, for anyone worried about another 2008-style housing crash, I would like to remind readers that our homebuying demographic (millennials in their early 30s) is peaking now. This is in sharp contrast to 2008 when the prime homebuying demographic bottomed out at the same time housing inventory levels peaked.
With respect to inventory, builders were building at a far faster pace prior to 2008. This is from Fortune Magazine: “In the eight years leading up to the Great Recession, homebuilders averaged 1.7 million monthly housing starts. Meanwhile, over the past eight years (2013 to 2021) they’ve averaged just 1.2 million per month.”
I highly recommend reading (or sharing) this entire Fortune article: Why We Won’t See a Housing Crash.
And yes, I realize I beat this dead horse far too often, but I continue to get so many questions that I had to give it one more whack. 😊
I also wanted an excuse to share that excellent Fortune article.
INTEREST RATE ROLLER COASTER
Interest rates have been on a roller coaster ride over the last week and three of the reasons include: (1) inflation signals that scare the bejeebers out of bond investors – pushing rates up; (2) the Omicron COVID variant – which is scaring investors everywhere and pushing rates down because of fears of more lockdowns/restrictions that will severely impact economic growth; and (3) employment reports that signal a strong economy.
While rates remain about 3/8% higher than where they were last year at this time, they are about 1/8% lower than where they were a few weeks ago.
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