How Homeownership Help Shield You from Inflation

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Real Estate


If you’re following the news today, you’re probably hearing about increasing home prices, rising consumer costs, and more. These inflationary concerns might make you wonder if you should wait to buy. Here’s why inflation shouldn’t stop you from purchasing a home this season.

Homeownership Offers Stability and Security

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.

Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost.

If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Investing and 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.”

So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs. 

Use Home Price Appreciation To Your Benefit

While it’s true rising home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win by locking your payment in at today’s rates and prices.

During inflationary times, it’s especially important to invest your money in an asset that will hold or grow in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the 1970s (see graph below):

This graph shows the inflation rate and the home price appreciation.

So, what does that mean for you? Once you buy a house, any price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value, you have peace of mind that history shows an investment in homeownership is a strong one.

If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. To make sure you have expert advice on your specific situation and how to time your purchase, let’s connect.

Reference: Dutko|Ragen Homes and Investments (Things to consider when buying a home, Summer 2022 Edition)