You have felt it!! Gas, Groceries, Cars, Tools, and EveryDay Items are going up and cost more
almost daily. These climbing consumer costs hurt your Budget, possibly postponing many
purchases, especially the larger items.
Here are thoughts on why Buying a Home or Owning a Home can help you fight the demands of
Owning a Home or Buying a Home will help you maintain Your Largest
Investopedia explains that during a period of high inflation, prices rise across the board. That’s
true for things like food, entertainment, and other goods and services, even housing. Both rental
prices and home prices are on the rise. So, as a buyer, how can you protect yourself from
increasing costs? The answer lies in homeownership.
When you buy or have a home, you have a fixed-rate mortgage on your home, your monthly
payment is fixed for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth
Management Reporter at Bankrate, says:
“A fixed-rate mortgage allows you to maintain the biggest portion of
housing expenses at the same payment. Sure, property taxes will rise
and other expenses may creep up, but your monthly housing payment
remains the same. That’s certainly not the case if you’re renting.”
So even if other prices increase, including the value of your home, your housing payment will
remain steady. Renters will not have that same benefit and will not be protected from rising
Investing in an Asset That Historically Outperforms Inflation
While it’s true rising home prices and higher mortgage rates mean that buying a house today
costs more than it did even a few months ago, you still have an opportunity to set yourself up for a long-term win. That’s because, in inflationary times, you want to be invested in an asset that
outperforms inflation and typically holds or grows in value.
The graph below shows how the average home price appreciation outperformed the average
inflation rate in most decades going all the way back to the seventies – making homeownership
a historically strong hedge against inflation (see graph below):
So, what does that mean for you? Today, experts forecast home prices will only go up from here
thanks to the ongoing imbalance of supply and demand. Once you buy a house, any home price
appreciation that does occur will grow your equity and your net worth. And since homes are
typically assets that grow in value, you have peace of mind that history shows your investment
is a strong one.
That means, if you’re ready and able, it makes sense to buy today before prices increase
If you’ve been thinking about buying a home this year, it makes sense to act soon, even with
inflation rising. That way you can fix your monthly housing cost and invest in an asset that
historically outperforms inflation.