How Inflation Affects Home Prices in San Ramon California
Inflation is more about how much less a dollar will buy than prices simply increasing. Prices must increase to make up the difference that the dollar is worth less each year. If there is more currency on the market the value of products and items must increase to meet the demand. And, just as with products, the housing market also is affected by inflation. Buying a home while the prices are down and interest rates are low, is an excellent time for investors and general homebuyers. Housing prices tend to rise just as with all other assets, rents will also rise as do construction costs for new homes. But there is a difference with mortgage rates and housing prices.
The relationship between rates and home prices
When rates fall, home prices tend to increase because there is an influx of buyers on the market naturally making supply and demand a factor. The correlation between the two rises and falls on the house payment. How much that house payment is determines how much more homeowners can spend on other items. With the rates being lower, homebuyers can afford a more expensive home because the interest rates bring down the monthly payments. When interest rates are low buying real estate can be more affordable but then the demand for homes also increases. During this time it’s important to get a fixed rate mortgage to protect you from higher interest rates in the future.
Investments in real estate during inflation
For investors, buying real estate during inflation is an iffy prospect. If an investor plans on hanging on to the property for some time, buying low now may be the best option. But if the investor plans and flipping the property and selling it shortly, it may not be the best economy for a home sale. The property may just take too long to sell so it’s best to hang onto the property until prices start to go up. Read more: Buying your First Investment - What you Need to Know
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There are several homes for sale that are ideal for investors and owner occupied homebuyers alike. Because inflation predictability is unstable, now would be an excellent time to consider investing in San Ramon real estate. Call me today and let’s discuss options and programs for financing. Timing is crucial, don’t miss your opportunity to cash in on low rates and a great deal on a home.