Housing Inflation

With inflation increasing the cost of living across the country, buying a home right now might seem like the worst financial decision someone could make. In reality, however, purchasing a manufactured home is one of the few financial steps you could take to hedge against inflation and rising home prices

Why You Should Consider Buying a Manufactured Home Soon

Purchasing a manufactured home soon could help you avoid house price increases in the future. Why is this important? Concisely, in order to purchase a more expensive home, you’ll need a higher loan amount. Besides being more difficult to qualify for a bigger loan, a higher loan amount almost always translates into higher monthly payments. On the flip side, if you purchase a manufactured home in the next few months and qualify for a fixed-rate manufactured home loan, you can take advantage of this spring’s or summer’s housing market and benefit from interest rates that are still relatively affordable.

Unfortunately, interest rates won’t remain low for too long. As inflation will continue to rise, interest rates are expected to rise as well. In fact, the Fed already increased interest rates for the first time since 2018 and announced it will increase them 6 more times this year. When interest rates go up, home loans inevitably become more expensive. This will make it more costly for a homebuyer to purchase a manufactured home, or any home. 

In addition to interest rates, inflation also affects rents. Depending on where you live, your manufactured home loan payment could be lower than the rent you currently pay. That’s because rising inflation rates will lead to wage increases, with a negative impact on every single sector of the economy, including the housing market. Since higher wages increase operating costs, which will flow into the cost of building and maintaining rentals as well, specialists anticipate higher rent prices in the near future.

If you wonder whether you should wait for manufactured home prices to drop, that won’t happen too soon. Similar to traditional site-built homes, manufactured homes have seen their sales prices rise steadily, though at a much lower rate. While experts predict that the increasing rate of housing prices will probably slow down this year, prices won’t decline. The reason is twofold: first, building material prices continue to climb; second, as the housing shortage worsens, there are fewer homes available for sale in a market where the demand remains high. 

Another aspect that a potential manufactured homebuyer may overlook is that buying a manufactured home is a path to building wealth, even if he or she needs to start small.

Unlike the rent payment, which goes into the landlord’s pocket every month, the mortgage payment is made up of interest and principal. The part of the payment that goes toward the principal reduces the amount that you owe on your manufactured home loan, allowing you to build equity. Once you have enough equity in your home, you could use it for any purpose you wish, including remodeling your home, refinancing your existing manufactured home loan, or buying another home. 

As a manufactured homeowner, you may also be eligible for specific tax breaks. As an example, you’ll be able to deduct your property taxes and mortgage interest. By reducing your tax liability, you’ll free up money for other things, such as paying off debt early or buying a car. Purchasing a manufactured home before home prices and interest rates increase even more brings along another important advantage: the less money you’ll put into your monthly payment, the more you’ll be able to save for other goals, such as home upgrades, business opportunities, vacations, and retirement accounts. 

When buying a manufactured home, specialists recommend installing the home on a permanent foundation and classifying it as real property in order to make the most of your investment. While all well-maintained manufactured homes increase in value over time, regardless of their classification, the homes classified as real property tend to appreciate at the same rate as conventional site-built construction. Buying a manufactured home with the help of a fixed-rate manufactured home loan and installing it on a permanent foundation basically means that your monthly payments will stay the same while your property gets more valuable over time.

Even though the advantages mentioned above make a solid case for buying a manufactured home in today’s housing market, we understand that purchasing a house right now might not be the best option for everyone. If you intend to wait for manufactured home prices to drop, you can use the time to keep saving for the down payment and improve your credit score, so you’re in a stronger position when you decide to enter the housing market. 

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