Inflation is a hot topic right now, as everyone is concerned about rising rates of inflation, which hit a 40-year high in March. While conversations about inflation often sound complex, basic principles are simple. Inflation is the rate at which goods increase over time. Increased inflation means less purchasing power for consumers, as the same amount of income will cover fewer goods and services.
Inflation impacts all products and industries, including the real estate industry. While it has some clear benefits for homeowners, it can also come with some challenges. Here are a few things homeowners should keep in mind during periods of high inflation to ensure that they’re able to keep up with rising costs and take advantage of this inflationary period.
Pros and Cons of Homeownership During Inflationary Periods
The key benefit of owning a home during periods of inflation is that home values appreciate at above-average rates. Inflation pushes all prices up, including the prices of homes. This means continued upward pressure on home prices and that you’ll gain increased equity and value in your home!
This increased value, however, often means increased carrying costs for homeowners. As your home becomes worth more, its carrying costs increase as well. While your mortgage rate might remain the same, the cost of your home’s insurance and taxes will likely increase.
Additionally, the cost of home maintenance will go up. For example, as of December of 2021, the cost of home care was up 9.3% over the previous year. The average cost to take care of a single-family home was around $4,886, up nearly $500 from the year before. Notably, this increase was higher in sunbelt cities like Birmingham.
As the cost of labor, materials, and equipment goes up, it makes sense that the cost of maintaining your home also goes up. And, while it might be tempting to put off some maintenance during periods of high inflation, this is a temptation that homeowners should avoid. Skipping necessary maintenance can lead to stressful and expensive emergency repairs, which are also more expensive than usual.
The key for homeowners is paying attention to rising expenses during periods of high inflation. Be prepared for an increase in insurance, taxes, and maintenance, and make sure that you’re ready to cover these increased costs. If not, you’ll need to find a way to cover these expenses or consider selling your home.
Selling During Times of Inflation
If you’re thinking about selling your Birmingham home, there are a few factors to consider. There’s plenty of good news for homeowners that want to sell. First, despite rising interest rates, inflation is continuing to push home prices up. Second, even with an increased cost of borrowing, there continues to be high demand for homes. This can mean higher home prices and less time waiting for your home to sell.
That said, there are a few challenges for homeowners to consider. First, if your home needs repairs or upgrades, the cost of doing those is higher than normal. While it always takes some amount of money to get your home ready for the market, homeowners currently will have to spend more to complete needed repairs or upgrades.
Second, homeowners need to think through what their next move will be. Since home prices are rising in most places, it could be expensive to buy another home. However, for homeowners downsizing, moving to an area with less demand, or planning to rent, it could be an ideal time to sell.
Want to Avoid Rising Costs of Maintenance and Repairs?
If you’re concerned about the rising costs of homeownership and want to sell your home without having to put more money into it, the good news is that you do have options!
At Home Buyers Birmingham, we buy homes in any condition. This means that homeowners don’t have to make any repairs or upgrades to get their homes ready to sell. It also means that you don’t have to worry about the inspection process and that you won’t be asked to pay for large repairs to close the deal.
In fact, you won’t be asked to pay for anything – no closing costs, commissions, or fees. First, we’ll give you a cash offer for your home. This is an “as-is” offer, regardless of your home’s condition.
Second, we’ll cover all closing fees and expenses. This means you won’t have to pay anything.
Third, we’ll close fast. We can close in as few as 7 days after giving you an offer. You pick the closing date and then let us handle the rest. You’ll simply walk away from the burden of homeownership with cash in your pocket.
Contact Home Buyers Birmingham today to learn more or to get your cash offer.
Home Buyers Birmingham
1821 11th Avenue South Suite #55331
Birmingham, Alabama 35205