As the news goes today, you're more than likely to have heard about an increase in prices. In your day-to-day life, prices for gas, groceries, and more are likely going up. There are more and more costs for people to buy things. This can hurt your wallet and make you think twice about any big purchases you have planned.
If you've been thinking about buying a home this year, you might be wondering if you should keep going or if it would be better to wait. Here's how owning a home can help you deal with the rising costs that come with inflation, even though the answer is different for everyone.
Stability and security come with owning a home
Investopedia says that when there is a lot of inflation, prices go up all over the place. That's true for things like food, entertainment, and other goods and services, as well as housing, as far as I know. Rental and home prices are going up. So, as a buyer, how can you protect yourself from the cost of things going up? The answer is to own your own home.
Buying a home lets you keep your biggest monthly expense, your housing costs, the same. As long as you get a fixed-rate mortgage on your home, you can set your payments for as long as your loan lasts. Usually, this is for 15 to 30 years.
As prices go up, your housing payment will stay the same. This will help you keep your budget in check even if other prices go up. It's not the same if you rent, and you won't be able to keep up with rising housing costs.
Use the rising value of your home to your advantage
Because mortgage rates and home prices are going up, it costs more to buy a house now than it did a year ago. You can still set yourself up for a long-term win, though. Now is the best time to buy so that you can lock in today's rates and prices before both of them rise.
You should put your money into an asset that usually stays or grows in value when inflation is high. The graph below shows that home price appreciation has outperformed inflation in most decades, going back to the seventies. This makes homeownership a historically strong hedge against inflation, as shown in the graph below.
Can owning a home protect you from inflation?
Today, experts say that home prices will only go up from here because there is still a lot of imbalance between supply and demand in the market. It will be good for your equity and your net worth if you buy a house. As a result, you can have peace of mind that your investment in a home is a good one, even in times when prices go up.
What Inflation Means For Your Homebuying Dreams
It might be a good idea to move forward with your plans even though prices are going up. If you want help with your specific situation and when to buy, a trusted real estate agent can help.
