If you’ve been to the grocery store lately or tried to book a hotel, you’ve seen the effects of inflation in today’s economy. Supply chain issues and labor shortages in multiple industries have contributed to price growth almost across the board. In the last year, home prices in the US rose almost 20% and are expected to climb another 8% next year.
With all this added expense on goods, services, and necessities, should you be worried about inflation? Perhaps more concerning, should you be worried about how inflation will affect the Long Island housing market in the coming years?
Put simply, while inflation can be a cause for concern about the overall health of the economy, real estate remains one of the most solid investments you can make in today’s market. Here’s why:
Housing is Unlike Other Products on the Market
Houses, like anything else, are ultimately a product. However, unlike other products which can become severely devalued, or even worthless depending on market fluctuations, housing will always retain some value. People need places to live, whether they’re buying or renting. That’s one of the reasons real estate is viewed as a solid investment, no matter what’s happening in the market.
Even if talk about hyper-inflation concerns continue, it’s still a good idea to buy a home if it makes sense for your situation. Home prices on Long Island are up 12% from last year at this time, meaning you could sell your existing property for a great price. If you’re a buyer looking to own for the first time, buying a home on Long Island now means you can lock in a great interest rate. You’ll also benefit from having a little more spending power to get that property you really want. Whether selling or buying, we would love to work with you. Our team has helped tons of people on Long Island this year and we’re gearing up for a busy 2022. Let us help you make your next move!
Owning a Home Provides for Steady Housing Costs
One of the benefits of a fixed-rate mortgage is just that: a fixed interest rate. That means your monthly mortgage payments will stay the same over the lifetime of your loan, rather than fluctuating due to the market and consumer demand. While you still have property taxes and other expenses for your home that can change, the lion’s share of the cost of holding onto your largest asset will remain steady.
If you haven’t yet taken the opportunity to refinance and secure a lower rate on your mortgage, now is truly the time. Interest rates are already rising and on track to continue their climb into 2022 - the Mortgage Bankers Association predicts rates will hit 4% by the end of next year! Inflationary conditions also influence interest rates, so again, lock in that low rate now. If you need a referral for a great local lender on Long Island, reach out to us – we have several trusted contacts we can refer you to.
Look to Existing Homes, Not New Homes
Most everyone dreams of building their own home with custom features and amenities. However, due to the cost of lumber and other construction materials, the cost for new homes is up significantly and likely will remain high for some time.
While the inventory of homes in the Long Island market is down, buying an existing home may end up being more affordable than building from the ground up. If you’re looking to buy on Long Island, click here to browse all available homes on the market and set up a free account to get alerts whenever a new property is listed.
Be Cautious, Not Afraid
In times of inflation, it’s important to be cautious and not overextend yourself. However, that doesn’t mean you have to be afraid and stay in a situation that doesn’t serve you. If your current home is not working for your needs, don’t be afraid to make a move. Meet with a lender to find out what you can afford to buy and then set a purchase budget that feels comfortable. Buying at the top end of your budget rarely makes sense in any market.
If you currently own a home on Long Island, you likely have increased equity you can put toward your next home. Click here to get a quick, free estimate of its current value or reach out to us to receive a personalized valuation. You might be surprised at what you can get for your Long Island property in today’s market.
With the economy still finding its way back after the effects of the COVID-19 pandemic, no one is certain exactly how things will shake out. However, we can count on the Long Island housing market continuing to be a good investment opportunity. Whether selling or buying, there’s a lot of upside in today’s market. If a move this year or next makes sense, give us a call to take the next step!