Inflation can be a difficult period for all sectors of the economy, including real estate. The inflationary conditions across the globe have only worsened after the COVID-19 pandemic. Research by the US Census Bureau and Zillow found that almost two million renters, unable to afford homes in metro areas, could afford to buy homes farther out (from metro areas) as they no longer had to commute to work. Consequently, many renters became home buyers, and home prices increased around the time the COVID-19 pandemic hit the US. The impact of the pandemic on real estate prices continues to frustrate home buyers.

Therefore, buying a home in this tumultuous time of real estate inflation can be tricky and overwhelming. You may want to consult the right licensed real estate agent to provide you with the right advice, helping you make informed choices.

How Rising Inflation Is Causing Shifts in the Market

With COVID-19 acting as a major blow to the global economy, inflation rates in the country peaked at 8.5% in 2022, the highest since 1982.

When the Federal Reserve tackles increased inflation risks by increasing its standard federal funds rate, the level of risk-free reserves in the financial system is increased, restricting the supply of money available for purchases of high-risk assets.

Rising interest rates discourage and limit business and consumer spending, especially on real estate and capital equipment. Rising interest rates also impact asset prices, reversing the wealth effect for individuals. As a result, banks also become more cautious in their lending decisions.

Consequently, people tend to avoid or defer major purchases in times of lower purchasing power, a characteristic of inflation. The collective increase in mortgage rates, cost of construction, and home prices with the simultaneous devaluation of long-term debt impact people’s buying choices for the worse, causing a decline in real estate buying trends.

While buyers can have a hard time buying houses, people who’ve invested in real estate stand to gain as investors see appreciation in the value of their properties. As a result, long-term investment tends to benefit investors in such a period.

Real estate inflation has also driven up rents. Landlords may benefit as people are choosing to make do with rental homes than pay exorbitant mortgages or invest during a period when valuations are at an all-time high.

How Does Inflation Affect Real Estate Prices?

In times of inflation, borrowing debt is increasingly difficult owing to the Federal Reserve Board’s measures to curb inflation by raising benchmark interest rates. This translates to higher interest rates, fewer loans, and more money required for down payments, affecting the purchasing power of individuals looking to invest in real estate.

With a larger focus on managing finances and curbing non-essential purchases, investment in sectors such as real estate loses priority. As a result of mortgage rates climbing up, monthly payments become higher. Alternatively, new construction is all the heavier on your pockets.

For example, if you were planning to put a 10% down payment on a property that cost $320,000 initially, you would have paid $32,000. However, if inflation causes the cost of the property to rise to $375,000, you’ll have to pay $37,500 as the down payment.

With the effect of inflation on home construction, the overall costs rise, making the investment a financially taxing decision. Labor costs increase, making it a challenging task to build a home. A surge in raw material prices leads to substandard materials being used, which further makes investments risky.

Should You Still Buy When Inflation Is High?

In a scenario where inflation is impacting market prices, one can often feel conflicted when deciding to invest in real estate. There isn’t a “right” answer that can cover all possible scenarios, but it entirely depends on your situation. Therefore, it is advisable always to consult a market expert or real estate agent to make an informed decision.

Pros of Buying When Inflation Is High

• Inflation may continue to rise. The market trends can continue to accentuate, and prices may be the cheapest they will ever be. Now may be the perfect opportunity to enter the market.  
• Properties tend to be good assets to hold on to when it comes to inflation because a home’s value will ultimately rise with the inflation rates. 
• Your family’s growing needs or the need to relocate may require a larger space as an immediate investment. 
• Buying may be financially a more favorable decision than renting. Holding a property helps in building equity.

Cons of Buying When Inflation Is High

• Inflation may go down. Market trends may change, and buying during an inflationary period may lead to overspending.
• The COVID-19 pandemic has created intense competition in the real estate market.

Work Through Your Inflation Concerns with an Experienced Real Estate Agent

As you’ve probably already realized, investing in real estate during inflation can be a hit or miss. Therefore, it’s best to consult an experienced and reputed real estate agent to make an informed choice.

In the running for more than 80 years, CENTURY 21 Bolte Real Estate has been helping North Central Ohio experience our heritage of excellence. Founded in 1936 by the first female broker in Ohio, we have grown to 40 agents and five offices without a nick to their commitment.

Contact us for all your real estate investment needs today!

What is an HOA?

A homeowner’s association (HOA) is a governing body for a community. These communities can include single-family homes, condos, or townhouses. An HOA essentially acts as a landlord or property manager; it takes care of certain aspects of the community in exchange for a fee. It also enforces community guidelines, which will vary depending on the association.

There’s a good chance you’ll encounter an HOA when looking for a new home. In the United States, nearly 60% of recently built single-family homes and 80% of houses in new subdivisions are part of an HOA. Let’s dive into the pros and cons of an HOA and see if they’re right for you.

Pros of Having an HOA

Most residents living with an HOA are happy with its services. According to a recent survey, 89% of residents rate their experience as very good, good, or neutral. Only 11% of residents dislike living in an HOA. So, what makes living in an HOA so enjoyable?

Outsourced Home Upkeep

In exchange for regular fees, HOAs handle home maintenance. They can manage lawn care, snow removal, heating and air conditioning systems, plumbing, roof repair, trash pickup, and more. Coverage will depend on the HOA and should be laid out for you before you buy the home.

You Could Sell Your Home for More Money in the Future

Houses with an HOA sell for at least 4% more than houses that don’t have HOAs. Because the HOA ensures the homes in the community remain in good condition all year round, it boosts the desirability of your home.

Fun Amenities, Without the Cost

Some communities have amenities like swimming pools, tennis courts, golf courses, playgrounds, and gyms. You’ll benefit from using these private facilities without fronting a massive amount of money. Some associations also have social events like block parties, community yard sales, and more.

Conflict Resolution Assistance

If you don’t want open conflict with your neighbors, an HOA can raise issues for you. For example, if your neighbor refuses to pick up after their pet, you can bring it to the HOA, and the committee will deal with it for you.

Cons of Having an HOA

While most people enjoy living in an HOA, a small minority regret choosing a home governed by another body. What cons should you consider before closing on a home in an HOA?

Costly Fees

HOA fees are mandatory and can be expensive depending on the community. The fees cover the services like lawn care, snow removal, etc. They also pay for employees who work for the HOA and go into a reserve fund, which is used for unexpected emergencies like natural disasters.

Additionally, if your HOA does not have enough money in its reserves to cover the cost of a certain project, it can impose a special assessment to pay for it, meaning your monthly dues will increase.

Not Paying Your Fees Could Result in a Lien or Foreclosure

HOA fees are obligatory, and if you fail to pay them, you put your home at risk of lien or foreclosure. If a resident doesn’t pay their fees, the HOA must make up the lost revenue, which it does by placing a lien on the property with the ability to foreclose, if needed.

Extensive Rules

HOAs have specific guidelines homeowners must follow, especially regarding the community’s outward appearance. Garbage cans left out after trash pickup, peeling paint on your home or mailbox, having your pet off-leash, or even keeping a dirty driveway or sidewalk puts you at risk for receiving fines from your HOA.

These rules also apply to how you choose to decorate your home. Many HOAs have a list of pre-approved exterior paint colors, dimensions for fencing, what type of fertilizer or sprinkler system you have in your yard, and even types of window coverings that face the street. Some residents don’t enjoy having so many rules imposed on them, which results in negative feelings towards the HOA.

Still Considering the Pros and Cons of an HOA? Talk to the Experts About What’s Right for You

When you have questions about the pros and cons of an HOA, reach out to us at CENTURY 21 Bolte Real Estate. We can help you ask the right questions to make sure it’s a fit for you. These questions might include asking about the financial status of the HOA, how often it increases dues and assessments, and how often it’s allowed to do so.

CENTURY 21 Bolte Real Estate was founded in 1936, and we’ve been able to grow from our roots in the Catawba Island/Marblehead area to span all of Erie, Huron, Ottawa, Sandusky, and Seneca Counties. Our agents are handpicked for their ability to achieve our clients’ goals, their level of service, communication, and dedication to our communities. We’re confident our team will help you sell your existing home for top dollar and find your dream home.

Reach Out to Our Team Today

When you’re ready to buy or sell, our agents will be there to help you every step of the way. Contact us today.

House hunting can be daunting in a competitive market when you’re eager to move into a new home. The pandemic upended the market only two years ago, and with many staying at home, most have realized their current living situation could use a change, whether it be leaving the city for the suburbs or downsizing. Demand has since skyrocketed to new levels, with housing inventory still lower than anticipated and down 15%. From rising home prices to increasing inflation, this is the toughest housing market buyers have faced in years. This is particularly true with cash offers making up over a quarter of home sales at 28%, compared to 23% one year ago.

By making a cash offer on a house a buyer provides an incredibly attractive prospect for sellers, who are concerned buyers may not qualify for a loan and that ultimately, the deal might fall through. With a cash offer, a buyer currently has all of the funds needed to purchase the home in their account, allowing for an immediate transfer. This, among other incentives, allows the buyer to stand, and for sellers to prioritize their offer. Although making a cash offer on a house streamlines the process and seems like a win-win scenario for both parties, there are still key elements to consider.

The Pros and Cons of a Making a Cash Offer on a House

Pros of a Cash Offer

Making a cash offer on a house comes with benefits for both buyers and sellers. When paying in cash, buyers benefit from the streamlined process. While loans require an inspection to ensure the house is in good shape, cash buyers assume the financial risk themselves and can bypass this step. Eliminating the need for loan approval, home appraisal, and inspection effectively cuts out the risk of lender-related delays and frees up time for the deal to close faster because there is no need to wait for financing to go through. In a competitive market, an offer without these contingencies and the risk of the deal falling through, is highly sought after by sellers, particularly those who are in a hurry to move.

Not only does this save the seller time, but making a cash offer on a house saves buyers the hassle of gathering all of the documentation needed to qualify for a loan, and might also save the buyer money. With a cash offer and a good agent to help negotiate, you might have enough leverage to make a lower offer and drive the price down. Although you might be convinced this would be a win-win scenario, there are still many risks involved in tying up a lot of cash in real estate property.

Cons of a Cash Offer

When making a cash offer on a house, you must keep in mind that tying up a substantial amount of cash is a risk and there may be additional costs you haven’t factored in. On top of having a three to six-month emergency fund, owning a home requires a budget for closing costs, taxes, insurance, and ongoing home renovations. On top of additional unforeseen costs, home appreciation varies drastically on location and your money could be earning more if it was invested elsewhere.

Considering Buying a Home with Cash?

Generally making a cash offer on a house isn’t for everyone. Besides those who have the time to save up for a cash offer over time, those most likely to make a cash purchase are investors looking to flip or rent and homebuyers looking to downsize. Investors typically have the cash on hand to avoid securing a loan for each asset, while those who are downsizing typically earn enough from selling their home to purchase a smaller one without the need for a loan.

Negotiating a Cash Offer on a Home

During times of low housing inventory, building a connection with a trusted local agent is the best way to streamline your search. When a bidding war breaks out, you’ll want to have an expert in the area on your side to avoid overpaying for a home and to provide immediate access to new listings that fit your criteria. Searching on your own takes time, and with competition high, you’ll want to have the latest information when it comes through. By partnering with a local agent that specializes in the region, you can stay one step ahead by having insight into what homes are worth, market changes and predictions, and other projects or insights into the area you may have never considered. With CENTURY 21 Bolte Real Estate’s email listing alerts, you can get fast, free and easy updates, as often as you’d like.

At CENTURY 21 Bolte Real Estate, we know that looking for a home is certainly an uphill battle. Higher interest rates meeting higher prices create a tough obstacle. Whether you’ve considered making a cash offer on a house or exploring your options, we’ll help you set up a plan for your short-term or long-term real estate needs. While there are plenty of reasons why a seller might prefer a cash deal, you won’t know what part of the deal is most appealing to them unless you negotiate.

Make things easier and simplify the process with a trusted real estate team today.

Are you wondering if it’s time to stop paying monthly rent and own your own home? There are pros and cons to buying and renting that may apply to you depending on where you’re at in your life. The decision of renting vs. owning a home is a big step; make these considerations before deciding whether to continue leasing or start your journey toward homeownership.

What Is Your Current Financial Situation?

Before starting to search for a home, the vast majority of first-time buyers will need to get a mortgage. The National Association of Realtors reports that 93% of first-time U.S. homebuyers finance their home purchase. Getting pre-approved before starting your search in earnest will ensure you’re ready to compete against other potential buyers once you find the perfect house.

The first major expense you’ll need to be able to afford is the down payment. Depending on the type of loan you’re trying to get, this amount can vary greatly but typically lands between 3% and 20% of the home’s total value. Those who qualify for a USDA or VA loan may not even have a down payment. Exploring your options for loans and their different down payment requirements is a good first step in setting a financial benchmark for buying your own home.

You’ll also need to consider your current credit standing. Since most mortgage lenders have their own FICO score requirements for working with a borrower, this can differ from lender to lender. However, you’ll generally want to be above 620 or 640 to be considered. Your credit score will also factor into how much interest you’ll have to pay on your mortgage, making it an important consideration before moving forward with your first home buying search. Again, do your research upfront to make informed decisions on whether or not you’re in the right financial position to buy a home now.

Debt-to-income ratio is another deciding metric in whether or not you can afford to take on a home loan now. Just as you should consider your rent-to-income (RTI) ratio when deciding what price range of rental to look for, you should heavily consider your overall debt-to-income ratio (DTI) when it comes to buying a home.

Lenders prefer a DTI of under 36%, with 28% or less going toward your monthly mortgage. However, the lower the number here, the better. There are two ways to reduce your DTI if it’s too high — increasing monthly income or decreasing monthly debt.

Finally, you’ll need to consider closing costs, which you’ll need to pay to the lender at the end of your home buying process before documentation can be signed. These usually end up at 2–5% of the home’s total value. While there are programs that help homebuyers pay for closing costs, you’ll want to find out whether or not you apply ahead of time and consider closing costs in your savings plan if not.

While homeowning allows you to build equity, it also comes with more costs. Even if your monthly mortgage payment is lower than rent, you’ll have to pay for more maintenance, utility, and repair costs. Your homeowner’s insurance will also be higher than your renter’s insurance. That’s why it’s important to make sure you’re encompassing every financial aspect of homeownership in your savings goals, habits, and planning prior to starting your search.

Ready to search for a home now? Check out our home buying guide here.

What Is Your Current Lifestyle Like?

Outside of financial considerations, your lifestyle should weigh heavily on your decision of renting vs. owning a home. Renting allows for a higher level of flexibility, giving the ability to adapt to potential job or life changes more fluidly. So for those that travel frequently or prefer to live a less fixed lifestyle, owning a home may not be the best option.

Homeownership brings you more stability and control over choices within your space. If you want to make changes in a unit you’re renting, you’ll have to get approval from your landlord and may ultimately be denied. In a home you own, you can make almost any improvements or changes you want with no one to answer to.

Renting also comes with the risk of sudden changes from the building owner affecting your living situation. If your landlord decides to sell or renovate the property, you may have to move before your lease ends. More commonly, you may face rent increases when it comes time to renew your lease that could price you out of your current living situation, which isn’t an issue when you own your own home.

Owning and caring for a home will take up more of your time than renting, but it also comes with the pride and privacy of ownership. You can create the space you want to live in and better match your lifestyle and needs in your own home. You can relax into a permanent residence that feels like home, lay deeper down roots, or start a family in one stable, dependable place.

CENTURY 21 Bolte Real Estate Can Help You Find the Perfect Home

If you’re financially and emotionally ready to embark on the journey of homeownership in North Central Ohio, CENTURY 21 Bolte Real Estate’s compassionate professionals can help. Our team members are experts on the Erie, Huron, Ottawa, Sandusky, and Seneca County communities and will help you find a house you can make into a long-term home.

Contact us to enlist our help in finding your first home.

Now that 2022 is underway, you likely have goals in place for work, life, and everything in-between. If you haven’t yet settled on home resolutions to reach your goals as a homeowner this year, we have a few ideas to help you brainstorm, and tips to keep you on the right path all year long. Check out our home resolutions below.

1. Upgrade Safety & Security Measures

From making sure your home is fire safe to installing a new outdoor security system, there are a number of ways you can make your home safer this year. Potential health hazards in your home can go unnoticed if you’re not paying attention, so if you haven’t made this a priority in the past, now is the perfect time to refocus on it.

For fire safety, you’ll first and foremost need to check and make sure your smoke detectors have batteries and are working properly. Although you probably already take dryer lint out of the lint trap after every load of laundry, it’s worth cleaning the dryer vents and ducts of lint every once in a while as well to avoid a huge fire risk over time.

Colorless, odorless deadly gases are some of the largest potential hazards within homes. For instance, radon can be difficult to detect without testing and is a known cause of lung cancer. Test kits can be found at most local hardware stores for as little as $20, so it’s definitely worth the effort of getting and using a test for your peace of mind. And while you’re at it, make sure you have carbon monoxide detectors on every floor of your home, which will help you detect any furnace or flue leaks before they become a major health and safety issue.

Lastly, upgrading your security system can help you and your family rest easier throughout 2022. Whether that means adding on video surveillance, using mobile control apps, or just checking an already-present system’s continued performance, a check-up or major upgrade will both help to ensure you have a solid plan in place in case of a security threat. And making sure your windows and doors are all closing and locking properly can help you feel safer in your day-to-day life.

2. Save on Energy Costs

Speaking of checking on your doors and windows, this check-up can also help in another home resolutions endeavor — saving on your monthly energy bill. Especially if you live in North Central Ohio like us, your energy costs can skyrocket in the cold winter months if you don’t have updated doors and windows or haven’t weather-proofed your home properly.

A few other tips can help in saving on energy costs and also make your day-to-day life greener. Don’t leave lights on that don’t need to be, only run your dishwasher or washing machine when they’re full, and turn off power strips when they’re not in use. Additionally, LED bulbs are more energy-efficient, and certain showerheads are more water-efficient.

Managing your air conditioning and heating systems better is another common way to save on your utility bills. Whenever you leave the house in the warmer months, make sure you switch your air conditioner off. And during the night in the cooler months, turn down your thermostat a little more than usual and opt to bundle with more blankets. Smart systems will allow you to set parameters so that these changes happen automatically, requiring less effort on your part.

Lastly, your landscaping can be a huge drain on your water bill if you have an automatic sprinkler system. Try turning on your sprinklers manually only when needed and avoid using excess water that your lawn doesn’t actually need in order to save more.

3. Clean Out Storage Spaces

From attics to basements and all the spaces in-between, making your home more clutter-free will help you to stay organized in 2022. Getting rid of things that aren’t adding to your daily life and making sure that new items you buy are ones that can last you a long time are great home resolutions to keep your home feeling light and refreshed.

Since your major storage areas probably aren’t given as much attention as other areas of your home, they can accumulate many things that you don’t need anymore. Starting your organization plan in these areas will free up space for you to store more items from the rest of your home once you start organizing other spaces.

New bins and shelving can help you to find a place for everything in your garage, basement, or attic. Since organizing can be pricey, you may want to consider covering costs by selling your items online (or in-person at a garage sale, if the weather permits).

4. Complete the Project You’ve Been Putting Off

Have you been dreaming about a deck for years? Or thinking about replacing the carpet, but it’s never been the right time? What about granite countertops or new appliances, or updating the master bathroom? Do you need a new roof, or windows, or anything else?

The laundry list of long-term changes people want or need to make to their homes is long, which can make homeownership feel overwhelming. Many people don’t know where or how to start tackling projects within their homes.

Determining which project to start with out of your home resolutions is two-fold. Which one would improve your day-to-day life the most? And which will improve the long-term value the most for when it comes time to sell?

High-return projects can range in scope, but often include smaller fixes that aren’t as large of an upfront investment. Consider refreshing your landscaping once the weather is warmer, or refinishing floors or cabinets while you’re stuck inside during colder months. Another typically low-investment, high-return project that will improve your daily life is a closet upgrade.

5. Save Up & Make Your Move

If you’re wanting to buy a new (or your first!) home sometime this year, then it’s definitely time to start saving up. Luckily, house down payments are lower than in previous years, and you may be expected to put only 3% down depending on the property.

Lifestyle changes like building ample savings into your monthly budget, automating money being moved over to your savings account on payday and not touching it after, cutting out your worst spending habits, and seeking opportunities for extra income can all help you reach your savings goals. These tips will help you move closer to your dream of homeownership every day just by making, spending, and saving more intentionally.

While you’re in this in-between period, it’s helpful to start thinking about what you’re actually looking for in an ideal house. Having a vision of what you want and a clear idea of what it will cost you is a great motivator for saving up over a long, tedious period of time.

Once you’ve saved up and are ready to take the leap, you’ll want to partner with a real estate agent you know you can count on to always act in your best interests. If you’re looking to find a new home in the next year, connect with one of our trusted real estate experts in North Central Ohio today.