Keep Calm and Carry On: The Silver Lining Playbook

You’ve heard the doomsday report: Rising cost-of-living. Rising interest rates. Signs of an economic slow-down. How’s a new homebuyer to get a break in this climate? In wealth-building, you make your breaks! Working with a strategic lender can help you navigate the perils and ensure you don’t get left behind. Waiting to make your move usually isn’t the best strategy. Just ask someone who didn’t buy two years ago because home values were “too high.”

Why You Should Still Buy

• If you’re a renter, rental rates continue to rise at historic proportions, eroding your ability to save for a new home.
• In strong markets, home values will continue to rise, though not at the breakneck pace of last year. If you’re trading up, the rise in a more valuable home is proportionally greater than the margin on the home you’re selling.
• A new normal of a 5-6% mortgage rate is actually a historically low rate.

What’s In the Fed’s Head

You might wonder what the Fed is thinking, raising rates when gas and food prices are soaring, making housing even less affordable. By sharply raising interest rates, the Fed hopes to tamp down consumer demand, which has overwhelmed supply – driving prices up. Higher rates will make it more expensive to carry a credit card balance, get a car loan or buy a house. Nonetheless, rate manipulation is the only instrument available to the Fed to control inflation.

The Upside of the Downside: Ways to Leverage the Climate

A Realtor.com inventory forecast made a sharp change from the beginning of the year to now, going from just a 0.3% rise in inventory to their current prediction of a 15% jump in the for-sale housing stock. As a result:

• This means more choice for qualified buyers, and possibly less price-pressure. According to the National Real Estate Association (NAR), a six-month supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up.
• Investors with existing rentals will continue to enjoy strong returns due to higher acquisition costs that may delay first-time home buyers.
• The competition in bidding wars may relax for buyers.

So, are you ready to create your “Silver Lining” playbook? Talk to a strategic partner to assess your options!