Owning a Home Helps Protect Against Inflation

Owning a Home Helps Protect Against Inflation

The effects of high inflation, such as increased prices on groceries and gas, can be felt on a daily basis. If you're currently a renter, you may be experiencing the impact even more as your rent continues to rise. Given these circumstances and the uncertainty surrounding a potential recession, you might question whether it's still a good idea to buy a home at this time. The answer is, yes, it does make sense, and here's why.

One of the advantages of homeownership is that it provides a shield against the rising costs brought about by inflation. According to Freddie Mac, buying a home today not only allows you to start building equity but also provides the benefit of a fixed-rate mortgage. This means that while other expenses in life continue to increase, your monthly housing costs remain stable over the long term. Unlike rents, which typically rise over time, a fixed-rate mortgage payment remains predictable throughout the duration of the mortgage, which is usually 15 to 30 years. This stability in your housing payment becomes particularly important when most other costs are on the rise.

On the other hand, renting tends to be influenced by inflation, causing monthly rent payments to increase as inflation rises. The graph below illustrates this trend. Therefore, choosing homeownership can offer a more stable and predictable housing expense compared to renting.

In summary, despite the challenges posed by inflation, buying a home can still be a wise decision. It provides a way to mitigate the impact of rising costs and offers stability in your housing expenses over time.

Opting for a fixed-rate mortgage enables you to safeguard yourself from future rent increases. In an environment of high inflation, when your rental agreement comes up for renewal, property managers may choose to raise rents to counterbalance the effects of inflation. This is supported by a recent survey indicating that 73% of property managers plan to increase rents over the next two years.

One of the significant advantages of homeownership is having a stable monthly expense, especially in times of economic uncertainty. By owning a home, you can enjoy the benefit of a fixed-rate mortgage, ensuring that your largest monthly payment remains steady. This protection against rising costs is not available to renters.

To summarize, the stability of your housing payment is particularly crucial during periods of high inflation. If you are interested in exploring homeownership and want to learn more, let's connect so that you can embark on your journey towards owning a home today.