Published on 25, Jul 2023

What Inflation Means for New and Current Homeowners

Inflation and deflation aren’t uncommon cycles in an economy’s lifespan, but while deflation is often taken as a sign of things to come, inflation presents a time of hardship without a definitive end. Inflation has a few notable impacts, but it largely increases interest rates, reduces consumers’ buying power, and slows down the economy’s overall growth. Not only did inflation reach a 40-year high of 9.1% in June 2022, there are also some lasting effects from the COVID-19 outbreak that have brought on a new level of complications.

The Federal Reserve, also called “the Fed”, has stepped in to raise interest rates to combat inflation. As of September 2022, the Fed kicked up interest rates five times. These rising rates help keep the economy afloat, though this puts a strain on everyday citizens. Mark Steven Fisher from the Fisher Mortgage Group has come to deliver his insights about the current buyer market.

“There’s good news on the horizon,” says Mark. “The inflation rate is currently at 2.97% as of June, which means that we’ll eventually start to see an improvement in the economy. Unfortunately, the Consumer Price Index (CPI) is still high at 305. Every day consumers are still paying their strenuous share for everyday commodities like utilities, food, shelter, fuel, and sales taxes.”

The pandemic also kicked off a new wave of housing demands, and this coupled with the fact that housing prices are on the rise (and have rapidly exceeded inflation ≈4:1), it’s difficult to bridge the disconnect. For many people, owning their own home is still a large part of “the American dream”. Housing prices being an average of $416,000, however, presents a clear and expensive roadblock on the way to that dream.

So, this presents an important question: “How do I buy my own home during inflation?” Mark gives a few tips and strategies that can help current and prospective homeowners decide their next steps.

1: Take a Second Look at Your Budget.

This is the best time to get a beat on how much you’re willing to spend on a home versus how much you can actually afford. List out all of your expenses and weigh them against your monthly income. This household budget will help you calculate a prospective mortgage payment, and this can also help you take steps towards calculating and saving for a future down payment.

2: Be More Flexible With Your Housing Options.

If you initially intended to buy a 3-bedroom, 2-bathroom home, your budget today might only allow for a 2BD 1BA condo. A house that’s 30 minutes away from your work might be more affordable than one that’s twenty. During inflation, it’s important to expand your horizons, be more flexible, and reevaluate. Mark says, “Always keep your hard ‘yes’ and ‘no’ options on hand, but be willing to compromise and fairly weigh out each home you find that might meet expectations.”

3: Look into New Developments

Emerging neighborhoods and new developments can present great opportunities for new homeowners or for current owners who are desiring a change. “These can often go for the same price as houses that have been on the market long-term, so you can end up saving a lot on repairs and renovation by buying new.”

4: Monitor the Market.

This can be an incredibly frustrating step, but it could ultimately work out in your favor. While no one can 100% predict when an inflation period will end or when rates will start to decrease, it’s important to keep an eye on the interest rates. Every marginal decrease can help you stretch each dollar to the fullest.

5: Talk with an expert.

“At the end of the day, there’s a lot to know, and not every solution is going to fit your situation,” says Mark. “Take an opportunity to speak with your bank, your credit union or with an accredited loan originator like myself. It’s important for you to sit down with someone who can really get to know you and your needs to develop a plan that’s right for you.”

While the economy is still in a state of healing, Mark encourages people to not give up hope. He poignantly adds, “If an opportunity won’t readily present itself, I’ll be there to help make one for you. Times won’t always be tough. We just have to do our best, stay aware, and keep an eye out for the future.”

ABOUT MARK STEVEN FISHER

For over ten years, Mark has helped over 2000 families achieve their goal of homeownership, totaling over $1,000,000,000 in closed loan volume. A Fordham University Gabelli School of Business Alumni, Mark accredits his success to three key things: relationships, communication and honesty. He regularly holds virtual home buyer seminars in English and Spanish to teach people about important home buying strategies, what they need to acquire a mortgage, discuss the current landscape of the buyer’s market, and more. He can also be found on YouTube and Instagram @NYC_Mortgage where he posts mortgage and personal finance tips.