Inflation is complicated. But the impact it has on your dollar is pretty straightforward. As the price of consumer goods and services go up, consumer spending power dwindles. In simple terms, your dollar doesn’t go as far as it once did.
According to the Bureau of Labor Statistics, the rate of inflation hit 8.6% in the past year. That’s the highest rate of inflation since 1981!2
If you’re just kicking off your search for a new home or you’ve been at it for a while, consider how the current condition of the market will impact your homebuying budget.
Getting pre-approved is often the first step in the homebuying process, giving you a sense of your financing options without going through the entire underwriting process.
Keep in mind that it’s almost 30% more expensive to buy a home than it was just a year ago.3 Unless your income has also trended upward in that time, your homebuying budget should account for the decreased power of your dollar. Adjust for inflation to avoid overextending yourself on a long-term financial commitment.
Once you have your budget set, use summer to make your move. This is a time when many buyers take their eyes off the prize in favor of vacations and travel plans.
On top of distracted competition, a 29% increase in inventory boosts the odds for determined buyers even higher.4
Keep your eyes peeled for listings that might be re-entering the market. Deals can fall through for a variety of reasons, and that home you really loved last month might be available again for less than the original asking price.
