Owning a Home Protects Against Inflation

You're probably feeling the effects of high inflation every day, as costs for food, gas, and other items have risen. If you're a tenant, you're probably feeling it a lot more as your rent continues to rise. With all of those increased costs and talk of a potential recession, you may be wondering if it is still a good time to buy a home. The short answer is – it does. Here’s why. 

Homeownership actually shields you from the rising costs inflation brings.

Freddie Mac explains how: 

“Not only will buying today help you begin to build equity, a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise – as has been the case the past few years.”

Unlike rents, which tend to rise with time, a fixed-rate mortgage payment is predictable over the life of the mortgage (typically 15 to 30 years). And, when the cost of most everything else is rising, keeping your housing payment stable is especially important.

The alternative to homeownership is renting – and rents tend to move alongside inflation. That means as inflation goes up, your monthly rent payments tend to go up, too (see graph below):

A fixed-rate mortgage allows you to protect yourself from future rent hikes. With inflation still high, when your rental agreement comes up for renewal, your property manager may decide to increase your payments to offset the impact of inflation. Maybe that’s why, according to a recent survey, 73% of property managers plan to raise rents over the next two years.

In a time of economic instability, having your largest monthly payment remain steady is a significant benefit of homeownership. If you continue to rent, you will not have that benefit and will be less insulated from growing costs.

Bottom Line

In times of strong inflation, a stable home payment is extremely vital. Let's talk so you can learn more and get started on your path to homeownership right away.