Financial markets are hitting a critical volatility point, and doing everything you can to better protect your available assets is key to riding out the developing situation. To aid you in securing your finances now rather than squander them under less favorable market conditions, let’s take a look at how Klamath Falls area home ownership can help to shield you from inflation:
A common point of discussion over the last couple of years has been the exorbitant increases in rent. This has been happening for a few potential reasons: landlords see a chance to widen profit margins, some are trying to claw back portions of the revenue they were missing out on during the federal eviction moratorium, and others have raised rents in anticipation of increased operating costs.
When renting, you start out by putting down a deposit that you may not have returned to you and then pay your rent every month. Your lease dictates when rent increases can take place, but this is typically done annually or when you extend your lease on the rented property.
Right now, landlords are trying to take advantage of these new lease agreements to cover those revenue holes as well as follow the market trend of skyrocketing rents across the board.
Purchasing a home is a very different situation where you carefully negotiate a final price point with the seller and lock in your loan interest rate with your lender. Your loan amount and interest rate are then set in stone unless you choose to refinance your mortgage later on.
In this case, buying a home and Klamath Falls home ownership will help avoid the possibility of wildly changing rent payments a year from now.
Property Values Outpacing Inflation
Except in cases of extreme market crashes, home values have always outpaced inflation.
This means there’s a good chance you could end up cashing in on your appreciating home’s value in the next few years if you so choose. This increase in value makes home ownership highly appealing to a lot of people.
We should specify that, when we discuss property value here, we are referring to the market value of the property and not the appraised value of the home. Appraisals are likely to come in lower than the perceived market value as the real estate market remains red hot in the midst of the second quarter of 2022.
With rents remaining historically high and the shortage of available housing in most areas, we expect market values to sustain – if not increase – in the foreseeable future.
Increasing Interest Rates
Something that has been talked about quite a bit over the last year or so was the likelihood that the Federal Reserve would begin increasing interest rates in an attempt to slow or stop inflation.
We spent a good portion of 2020 and 2021 with historically low interest rates that made for a spectacular option for buyers to purchase homes and owners to refinance. However, in March of 2022, the Federal Reserve began raising those interest rates a bit. In May, they then took the step of piling on a massive interest rate increase as a more drastic measure.
First, what this means regarding home ownership is that getting approved for a mortgage right now is going to be a bit more complicated, but it is still absolutely doable. Second, you will have a harder time locking in an amazing interest rate, but this is something that can be remedied with a refinance once the economic markets have normalized and interest rates are reduced again.
Your Partner on the Path to Home Ownership in Klamath Falls
If you’re looking to step into home ownership in Klamath Falls, contact us today at 5418841343!