The effects of inflation are being felt by nearly everyone in every place across the globe, but especially here in the United States today.
Whether inflation affects your individual cost of living, prices at the gas pump, your savings, or macroeconomic factors like the value of the dollar, its effects are widespread and can affect many different areas of your life in many different ways.
However, one effect of inflation that is very relevant to homeowners is whether it’s a good time to sell your home when inflation and its effects are running high. When inflation is high, it will usually drive up home values, causing the real estate market to be dominated by sellers that can demand more and more for their homes.
This may make you think that times like these make it a good idea to sell your home at top dollar. While this is one school of thought, there also exists another option that homeowners should consider before listing their home with their local realtor: remodeling.
Remodeling your home while inflation is high is an option for many homeowners that have been looking to upgrade areas of their home or put additions in like pools, hot tubs, or extra rooms or office spaces. Another reason why remodeling may be a great idea is to do renovations to areas of the home that may have become outdated, such as bathrooms or kitchens.
Remodeling your home can be attractive especially if you have equity in your home that you can tap into. Since home values have gone up drastically, this means you have more equity that you can use for home improvements.
This begs the question: should I sell or remodel? And what makes more sense with inflation?
The answer might surprise you. Read on to find out what the best option is for you and your family.
Advantages of Remodeling When Inflation is High
Maybe you’ve always wanted to install that in-ground pool in the backyard or that new addition to your living room. Or maybe you want to finally install that home office you’ve been dreaming about. No matter what your goals are with your remodel, choosing to do so when inflation is high can have many advantages.
Here are the top advantages that you will find when you decide to remodel your home in times like these:
- You have more equity in your home
- Increase in your home’s value
- Better energy efficiency
Having more equity in your home is a huge advantage for people who are looking to remodel their homes. As we mentioned previously, since home values are higher than normal right now, you can use the appraised value of your home to tap into the equity that is now available.
Tapping into this equity allows you to do things such as taking out a home equity loan or a home equity line of credit (HELOC) to finance the remodeling of your home. Be sure to talk to a qualified lender about the options that you have when using the equity in your home for a remodel.
Increasing your home’s value is another great advantage of remodeling. Adding in things like a pool, upgraded kitchen, new bathroom, or a finished basement will cause the value of your home to increase even more than it already has due to inflation.
This means, that when you are actually ready to sell, you can command a higher price for your home because of the upgrades that you’ve done to your home.
Being more energy efficient is great for the environment and can save you money at the same time. If you choose to remodel your home, you can install things like solar panels or energy-efficient appliances like refrigerators, washers, dryers, and hot water heaters.
Advantages of Selling When Inflation is High
While the advantages of remodeling your home are significant, the advantages of selling your home are also important to consider. The biggest advantages of selling your home with high inflation are:
- Demanding a higher price for your home
- Ability to relocate easily
- Use the money for other things
Demanding a higher price for your home is the first and most important advantage of selling your home while inflation is high. Since the cost of living tends to rise when inflation is high, buyers are willing to pay more for homes on the market.
You can also likely get favorable terms when you sell your home, such as waiving home inspections and attracting buyers that are paying with cash.
The ability to relocate easily is another advantage to selling your home when inflation is high. Maybe your spouse got a new job, or maybe you’ve always wanted to move down south to the warm weather. Whatever the reason is, you would then have the ability to relocate wherever you want after you sell your home.
Using the money from the sale of your home to put it towards other things like hobbies, vacations, or things like cars or boats is another advantage that you get when you decide to sell. It’s up to you what you want to do with the proceeds from selling your home, as it could open up doors to starting a new business or investing in the stock market which can generate a return on those investments.
Whether you should sell or remodel is a choice that you need to make for yourself after considering the advantages of both options.
Remember that if you decide to remodel, you can tap into the equity that the increased home values have added to your home. This can allow you to make improvements on the home that further increase the value when you eventually decide to sell.
The main advantage of selling your home when inflation is high is to take advantage of the inflated sale prices you’ll get when you sell. However, if you decide to sell your home, you are then left with the task of finding a new home, which will likely also have an inflated sale price.
Be sure to always talk with a qualified lender about all the options you have to make the best decision for you and your family whether you should sell or remodel your home.